Exhibit 10.5

EXECUTION VERSION

MANUFACTURING AND SUPPLY AGREEMENT

BY AND BETWEEN

PFIZER INC.

AND

UPJOHN INC.

DATED AS OF NOVEMBER 16, 2020

 

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TABLE OF CONTENTS

 

          Page  

1. DEFINITIONS

     1  

2. SUPPLY OF PRODUCT

     13  

2.1

   Agreement to Supply      13  

2.2

   Use of Facility, Equipment, Molds and Tooling      15  

2.3

   Capacity      16  

2.4

   Forecasts and Purchase Orders      16  

2.5

   Failure to Supply      19  

2.6

   Delivery; Risk of Loss      21  

2.7

   Procurement of Materials      22  

2.8

   Product Samples      23  

2.9

   Storage      23  

2.10

   Transitional Support      24  

3. PRICE; PAYMENT; PRICE ADJUSTMENTS; TAXES

     26  

3.1

   Price      26  

3.2

   Price Adjustment      27  

3.3

   Cost Improvement      31  

3.4

   Price Review and Audit Procedure      31  

3.5

   Invoices and Payment      32  

3.6

   Taxes      33  

3.7

   No Duplicative Payments      35  

4. MANUFACTURING STANDARDS AND QUALITY ASSURANCE

     35  

4.1

   Quality Agreement      35  

4.2

   Manufacturing Standards      35  

4.3

   Manufacturing Changes      36  

4.4

   Pest Control      36  

4.5

   Legal and Regulatory Filings and Requests      37  

4.6

   Quality Tests and Checks      37  

4.7

   Responsibility for Non-Complying Product      38  

4.8

   Rejection of Non-Complying Product      38  

4.9

   Disposal of Rejected and Non-Complying Product      40  

4.10

   Maintenance and Retention of Records      40  

4.11

   Government Inspections, Seizures and Recalls      40  

4.12

   Inspections      41  

4.13

   Segregation of Restricted Compounds      42  

4.14

   Packaging Material      43  

5. COVENANTS

     43  

5.1

   Mutual Covenants      43  

5.2

   Manufacturer Covenants      44  

5.3

   Manufacturer’s Social Responsibility      46  

 

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TABLE OF CONTENTS

(continued)

 

          Page  

5.4

   Notice of Material Events      47  

5.5

   Disclaimer of Warranties      47  

6. ENVIRONMENTAL COVENANTS

     47  

6.1

   Compliance with Environmental Laws      47  

6.2

   Permits, Licenses and Authorization      47  

6.3

   Generation of Hazardous Wastes      48  

6.4

   Environmental Sustainability Information      48  

6.5

   Environmental and Health and Safety Reviews      49  

7. TERM; TERMINATION

     49  

7.1

   Term of Agreement      49  

7.2

   Term of Facility Addendum      50  

7.3

   Termination for Cause      50  

7.4

   Termination for Disposition of Facility      50  

7.5

   Termination in Event of Insolvency      51  

7.6

   Termination for Breach of Anti-Bribery Representation      51  

7.7

   Termination for Convenience by Customer      52  

7.8

   Effect of Termination or Expiration      52  

7.9

   Unused Materials      53  

7.10

   Return of Materials, Tools and Equipment      54  

8. INTELLECTUAL PROPERTY

     55  

8.1

   Customer’s Intellectual Property      55  

8.2

   Improvements and Developments      55  

8.3

   Ownership of Other Property      56  

8.4

   Limited Right to Use      56  

9. JOINT ADVISORY COMMITTEE

     56  

9.1

   Formation and Role      56  

9.2

   Membership; Chairs      57  

9.3

   Meetings      57  

9.4

   Areas of Responsibility      58  

9.5

   Advisory Role; No Decision-Making Authority      58  

10. INDEMNIFICATION; LIMITATIONS OF LIABILITY

     58  

10.1

   Indemnification of Customer      58  

10.2

   Indemnification of Manufacturer      59  

10.3

   Indemnification Procedures      60  

10.4

   Limitations on Liability      62  

10.5

   Indemnification Obligations Net of Insurance Proceeds and Other Amounts     
63  

10.6

   Additional Matters      64  

 

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TABLE OF CONTENTS

(continued)

 

          Page  

11. INSURANCE

     65  

11.1

   Requirements to Maintain      65  

11.2

   Amounts and Limits      65  

12. CUSTOMER-SUPPLIED MATERIALS; BUY-SELL MATERIALS; TRANSITION

     66  

12.1

   Supply; Rejection; Transition      66  

12.2

   Title and Risk of Loss      68  

12.3

   Reimbursement for Loss of Customer-Supplied Materials      68  

13. CONFIDENTIALITY

     69  

14. SUPPLY CHAIN SECURITY

     69  

14.1

   Supply Chain Representations      69  

14.2

   C-TPAT      69  

15. RECORDS AND AUDITS

     70  

15.1

   Records      70  

15.2

   Audits      70  

16. AG AND BRANDED PRODUCT SUPPLY AGREEMENT

     71  

17. NOTICES

     71  

18. MISCELLANEOUS

     73  

18.1

   Negotiations of Dispute      73  

18.2

   Publicity      73  

18.3

   Governing Law and Venue      73  

18.4

   Relationship of the Parties      74  

18.5

   Assignment; Binding Effect      75  

18.6

   Force Majeure      76  

18.7

   Severability      76  

18.8

   Non-Waiver; Remedies      76  

18.9

   Further Documents      77  

18.10

   Forms      77  

18.11

   Headings; Interpretation      77  

18.12

   Rules of Construction      78  

18.13

   Counterparts      78  

18.14

   Amendments      78  

18.15

   Entire Agreement      79  

18.16

   Non-Disturbance      79  

 

Attachment A    Form of Facility Addendum Attachment B    Quality Agreement
Attachment C    Monthly Inventory Report Attachment D    Anti-Bribery and
Anti-Corruption Principles Attachment E    Policies Attachment F    Example
Product Materials Adjustment Calculation Attachment G    Example Price
Calculation of Volume Change Pricing Adjustment

 

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MANUFACTURING AND SUPPLY AGREEMENT

THIS MANUFACTURING AND SUPPLY AGREEMENT (this “Agreement”), dated as of
November 16, 2020 (the “Effective Date”), is by and between Pfizer Inc., a
Delaware corporation (hereinafter “Manufacturer”), and Upjohn Inc., a Delaware
corporation (hereinafter “Customer”). Manufacturer and Customer may be referred
to herein individually as a “Party” or collectively as the “Parties”.

W I T N E S S E T H:

WHEREAS, Pfizer Inc. (“Pluto”) and Upjohn Inc. (“Spinco”) have entered into a
Separation and Distribution Agreement, dated as of July 29, 2019 (as amended,
modified or supplemented from time to time in accordance with its terms, the
“Separation Agreement”), pursuant to which Pluto and Spinco have agreed to
separate the Spinco Business from the Pluto Business so that, as of the
Distribution Date, the Spinco Business shall be held by members of the Spinco
Group and the Pluto Business is held by members of the Pluto Group (the
“Separation”);

WHEREAS, after the Separation, Spinco shall become a standalone publicly traded
company, pursuant to the terms of the Separation Agreement and a Business
Combination Agreement, dated as of July 29, 2019 (the “Business Combination
Agreement”), by and among Pluto, Spinco, Mylan N.V., a public company with
limited liability incorporated under the laws of the Netherlands, and certain of
their Affiliates;

WHEREAS, in connection with the Separation, the Parties are entering into an
Authorized Generic and Branded Product Supply and Distribution Agreement (the
“AG and Branded Product Supply Agreement”), pursuant to which Manufacturer shall
manufacture and supply certain authorized generic and branded pharmaceutical
products to Customer and Customer may commercialize such products on the terms
and subject to the conditions set forth therein; and

WHEREAS, in connection with the Separation, the Parties are entering into this
Agreement, pursuant to which Customer desires to procure from Manufacturer, and
Manufacturer desires to supply or cause one of its Affiliates to supply to
Customer, Products for sale by Customer or its Affiliates in the Territory
during the Term, upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of these premises and the covenants and
agreements set forth herein, and intending to be legally bound thereby, the
Parties hereby agree as follows:

 

1.

Definitions.

As used in this Agreement, the following capitalized terms shall have the
meanings set forth below. Capitalized terms not otherwise defined in this
Agreement shall have the meanings ascribed to such terms in the Separation
Agreement.

 

  1.1

“Accounting Method” means U.S. Generally Accepted Accounting Principles (GAAP)
or, if otherwise agreed by the Parties, an alternative accounting method used in
the ordinary course of business.

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  1.2

“Act” means the U.S. Federal Food, Drug, and Cosmetic Act, as amended.

 

  1.3

“Action” means any demand, action, claim, dispute, suit, countersuit,
arbitration, inquiry, subpoena, proceeding or investigation of any nature
(whether criminal, civil, legislative, administrative, regulatory, prosecutorial
or otherwise) by or before any federal, state, local, foreign or international
Governmental Authority or any arbitration or mediation tribunal.

 

  1.4

“Additional Quantities” shall have the meaning set forth in Section 2.4(c).

 

  1.5

“Affected Products” shall have the meaning set forth in Section 10.4(a).

 

  1.6

“Affiliate(s)” means, when used with respect to a specified Person, a Person
that controls, is controlled by, or is under common control with such specified
Person. As used herein, “control” (including, with correlative meanings,
“controlled by” and “under common control with”), when used with respect to any
specified Person shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or other interests, by
contract, agreement, obligation, indenture, instrument, lease, promise,
arrangement, release, warranty, commitment, undertaking or otherwise. It is
expressly agreed that, from and after the Effective Date, solely for purposes of
this Agreement (a) each member of the Spinco Group shall be deemed to not be an
Affiliate of any member of the Pluto Group and (b) each member of the Pluto
Group shall be deemed to not be an Affiliate of any member of the Spinco Group.

 

  1.7

“AG and Branded Product Supply Agreement” shall have the meaning set forth in
the Recitals.

 

  1.8

“Agreement” shall have the meaning set forth in the Preamble.

 

  1.9

“API” means active pharmaceutical ingredient.

 

  1.10

“Batch Size” shall have the meaning set forth in Section 2.4(e)(ii).

 

  1.11

“Binding Forecast Period” shall have the meaning set forth in Section 2.4(b).

 

  1.12

“Bulk Drug Product” means Product that has been manufactured into a final
pharmaceutical product following a specific formulation and set of
specifications, including drug substance (e.g., tablets or granules) for
administration to humans but has not been packaged for use or for
commercialization.

 

  1.13

“Business Combination Agreement” shall have the meaning set forth in the
Recitals.

 

  1.14

“Business Day” means (a) any day other than a Saturday, Sunday or a day on which
banking institutions are authorized or obligated by Law to be closed in New
York, New York or (b) with respect to those activities specific to a Facility,
any day other than any day on which banks located in the city and country in
which the Facility is located are authorized or obligated to be closed.

 

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  1.15

“Buy-Sell Materials” means the materials that Customer sells to Manufacturer for
use in manufacturing Product for Customer under the terms of this Agreement and
as set forth in the applicable Facility Addendum. For the avoidance of doubt,
Buy-Sell Materials are distinguishable from and exclusive of both Product
Materials and Customer-Supplied Materials.

 

  1.16

“Conflict Minerals” shall have the meaning set forth in Section 5.3(c).

 

  1.17

“Conversion Cost Markup” shall have the meaning set forth in Section 2.5(e).

 

  1.18

“Conversion Costs” means, with respect to a given Product, (a) direct and
indirect labor costs, (b) equipment costs, including depreciation,
(c) laboratory and quality control costs at the applicable Facility, including
Product testing and on-going stability studies, (d) quality assurance costs,
(e) general site and manufacturing support costs for resources that support the
manufacture of the applicable Product (including utilities, warehousing,
consumables, maintenance, engineering, safety, human resources, finance,
information technology, plant management and other similar activities, capital
improvements in the form of depreciation, an allocation of costs for above site
services provided to the applicable Facility for resources that support the
manufacture of the applicable Product and an allowance for inventory loss, in
each case, at the Facility-level), (f) costs paid to Third Party manufacturers
for the manufacture and supply of such Product (or components thereof), (g) all
costs associated with the performance of Manufacturer’s obligations under
Section 4.6, including all activities, tests and checks set forth therein, and
(h) costs paid to Third Party contractors for services provided in connection
with the manufacture and supply of such Product, in each case associated with
such Product.

 

  1.19

“CPP” shall have the meaning set forth in Section 4.5(a).

 

  1.20

“C-TPAT” means the Customs-Trade Partnership Against Terrorism program of the
U.S. Bureau of Customs and Border Protection.

 

  1.21

“C-TPAT Benefits” means the expected benefit afforded to importers that have
joined C-TPAT related to substantially fewer of their imports being inspected
and, hence, fewer supply chain delays.

 

  1.22

“Current Good Manufacturing Practices” or “cGMP” means all applicable standards
and applicable Laws (as defined below) relating to manufacturing practices for
products (including ingredients, testing, storage, handling, intermediates, bulk
and finished products) promulgated by the FDA or any other applicable
Governmental Authority (including, without limitation, EU or member state level)
having jurisdiction, including, but not limited to, standards in the form of
applicable Laws, guidelines, advisory opinions and compliance policy guides and
current interpretations of the applicable authority or agency thereof (as
applicable to pharmaceutical and biological products and ingredients), as the
same may be updated, supplemented or amended from time to time.

 

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  1.23

“Customer” shall have the meaning set forth in the Preamble.

 

  1.24

“Customer Indemnified Party” shall have the meaning set forth in
Section 10.1(a).

 

  1.25

“Customer-Owned Improvements and Developments” shall have the meaning set forth
in Section 8.2(b).

 

  1.26

“Customer Property” means all Intellectual Property, together with all
materials, data, writings and other property in any form whatsoever, which is
(a) owned or controlled by Customer or its Affiliates as of and following the
Effective Date and (b) provided to Manufacturer by or on behalf of Customer or
its Personnel under this Agreement.

 

  1.27

“Customer-Supplied Materials” means the materials supplied by Customer to
Manufacturer under the terms of this Agreement and as set forth in the
applicable Facility Addendum. For the avoidance of doubt, Customer-Supplied
Materials are distinguishable from and exclusive of both Product Materials and
Buy-Sell Materials.

 

  1.28

“Delivery” shall have the meaning set forth in Section 2.6(a).

 

  1.29

“Developments” shall have the meaning set forth in Section 8.2(a).

 

  1.30

“Effective Date” shall have the meaning set forth in the Preamble.

 

  1.31

“Environmental Laws” means any Laws relating to (a) human or occupational health
and safety; (b) pollution or protection of the environment (including ambient
air, indoor air, water vapor, surface water, groundwater, wetlands, drinking
water supply, land surface or subsurface strata, biota and other natural
resources); or (c) exposure to, or use, generation, manufacture, processing,
management, treatment, recycling, storage, disposal, emission, discharge,
transport, distribution, labeling, presence, possession, handling, Release or
threatened Release of, any hazardous or toxic material, substance or waste and
any Laws relating to recordkeeping, notification, disclosure, registration and
reporting requirements respecting hazardous or toxic materials, substances or
wastes.

 

  1.32

“Environmental Liability” means any Liability arising under Environmental Laws.

 

  1.33

“Exclusive Purchase Requirement” means, on a Product SKU-by-Product SKU and
country-by country basis within the applicable Territory, (a) in the first two
(2) years of the Initial Term, one hundred percent (100%) of Customer’s total
requirements for such Product SKU and (b) in the third (3rd) year of the Initial
Term, fifty percent (50%) of Customer’s total requirements for such Product SKU;
provided, however, that (x) such quantities of Product reasonably procured by
Customer to qualify a back-up supplier for such Product shall be excluded from
the Exclusive Purchase Requirement, and (y) for the avoidance of doubt, Customer
may commercialize such quantities of Product procured under (x) above without
violating the applicable Exclusive Purchase Requirement or related provisions in
Section 2.1(e).

 

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  1.34

“Exclusive Purchase Requirement Suspension Period” shall have the meaning set
forth in Section 2.5(b).

 

  1.35

“Exclusivity Period” means the three (3) year period immediately following the
Effective Date, as such period may be earlier terminated pursuant to this
Agreement.

 

  1.36

“Extension Period” shall have the meaning (a) with respect to this Agreement, as
set forth in Section 7.1 and (b) with respect to a Facility Addendum, as set
forth in Section 7.2.

 

  1.37

“Facility” means, with respect to a given Product, Manufacturer’s manufacturing
facility located at the address set forth in the applicable Facility Addendum
for such Product and such other facilities permitted pursuant to this Agreement
and any applicable Facility Addendum to be used by Manufacturer in the
manufacture, packaging or storage of (a) such Product or (b) materials utilized
in the manufacture or storage of such Product hereunder.

 

  1.38

“Facility Addendum” means a document executed by the Parties or their respective
Affiliates for one or more Products to be manufactured in a Facility pursuant to
this Agreement, which shall be substantially in the form of Attachment A to this
Agreement.

 

  1.39

“Facility Conversion Cost” means, with respect to a given Facility and Fiscal
Year, the sum of all Product Conversion Costs for Products manufactured for
Customer or the applicable Affiliate of Customer at such Facility during such
Fiscal Year.

 

  1.40

“Facility Conversion Cost Adjustment Fiscal Year” shall have the meaning set
forth in Section 3.2(b)(i).

 

  1.41

“Facility Conversion Cost Baseline Fiscal Year” shall have the meaning set forth
in Section 3.2(b)(i).

 

  1.42

“Facility Conversion Cost Threshold” shall have the meaning set forth in
Section 3.2(b)(i).

 

  1.43

“Facility Disposition” shall have the meaning set forth in Section 7.4.

 

  1.44

“Facility Actual Product Materials Cost” means, with respect to a given Facility
and Fiscal Year, the sum of all actual costs of Product Materials for Products
manufactured for Customer or the applicable Affiliate of Customer at such
Facility during such Fiscal Year.

 

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  1.45

“Facility Estimated Product Materials Cost” means, with respect to a given
Facility and Fiscal Year, the sum of all estimated costs, as determined in good
faith by Manufacturer and notified to Customer prior to the beginning of such
Fiscal Year, of Product Materials for Products manufactured for Customer or the
applicable Affiliate of Customer at such Facility during such Fiscal Year.

 

  1.46

“Familial Relative(s)” means a parent, spouse, child or sibling (including any
such relationships formed by marriage).

 

  1.47

“FDA” means the U.S. Food and Drug Administration or any successor agency.

 

  1.48

“Finished Product” means Product that has been packaged for commercialization
and distribution to patients incorporating Bulk Drug Product.

 

  1.49

“Firm Order” shall have the meaning set forth in Section 2.4(b).

 

  1.50

“Fiscal Year” means each twelve-month fiscal period commencing on January 1 with
respect to Facilities located in the United States and December 1 for all other
facilities, in each case, during the Term.

 

  1.51

“Force Majeure Event” shall have the meaning set forth in Section 18.6.

 

  1.52

“Forecast” shall have the meaning set forth in Section 2.4(b).

 

  1.53

“Forms” shall have the meaning set forth in Section 18.10.

 

  1.54

“Global Trade Control Laws” means all applicable economic sanctions, export and
import control laws, regulations and orders.

 

  1.55

“Government” means all levels and subdivisions of U.S. and non-U.S. governments
(i.e., local, regional or national and administrative, legislative or
executive).

 

  1.56

“Government Official” means (a) any elected or appointed governmental official
(e.g., a member of a ministry of health), (b) any employee or person acting for
or on behalf of a governmental official, agency or enterprise performing a
governmental function, (c) any candidate for public office, political party
officer, employee or person acting for or on behalf of a political party or
candidate for public office or (d) any person otherwise categorized as a
Government Official under local Law. As used in this definition, “government” is
meant to include all levels and subdivisions of U.S. and non-U.S. governments
(i.e., local, regional or national and administrative, legislative or
executive).

 

  1.57

“Governmental Authority” means any nation or government, any state, municipality
or other political subdivision thereof, and any entity, body, agency,
commission, department, board, bureau, court, tribunal or other instrumentality,
whether federal, state, local, domestic, foreign or multinational, exercising
executive, legislative, judicial, taxing, regulatory, administrative or other
similar functions of, or pertaining to, government and any executive official
thereof.

 

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  1.58

“Hazardous Materials” means (a) any petroleum or petroleum products, radioactive
materials, toxic mold, radon, asbestos or asbestos-containing materials in any
form, lead-based paint, urea formaldehyde foam insulation or polychlorinated
biphenyls; and (b) any chemicals, materials, substances, compounds, mixtures,
products or byproducts, biological agents, living or genetically modified
materials, pollutants, contaminants or wastes that are now or hereafter become
defined, regulated or characterized as or included in the definition of
“hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely
hazardous wastes,” “restricted hazardous wastes,” “special waste,” “toxic
substances,” “pollutants,” “contaminants,” “toxic,” “dangerous,” “corrosive,”
“flammable,” “reactive,” “radioactive,” or words of similar import, under any
Environmental Law.

 

  1.59

“Improvements” shall have the meaning set forth in Section 8.2(a).

 

  1.60

“Increments” shall have the meaning set forth in Section 2.4(e)(ii).

 

  1.61

“Indemnifying Party” shall have the meaning set forth in Section 10.3(a).

 

  1.62

“Indemnitee” shall have the meaning set forth in Section 10.3(a).

 

  1.63

“Indemnity Payment” shall have the meaning set forth in Section 10.5(a).

 

  1.64

“In-Flight or Shared Volume Product” means those Products identified as such in
a Facility Addendum.

 

  1.65

“Initial Price” shall have the meaning set forth in Section 3.1(a).

 

  1.66

“Initial Price Term” means, with respect to a Product set forth in a Facility
Addendum, the period of time beginning on the Effective Date and ending on the
last day of the first full Fiscal Year of the Term of such Facility Addendum.

 

  1.67

“Initial Term” shall have the meaning (a) with respect to this Agreement, set
forth in Section 7.1 and (b) with respect to a Facility Addendum, set forth in
Section 7.2.

 

  1.68

“Insolvent Party” shall have the meaning set forth in Section 7.5.

 

  1.69

“Insurance Proceeds” means those monies (a) received by an insured from an
insurance carrier; (b) paid by an insurance carrier on behalf of the insured; or
(c) received (including by way of setoff) from any Person in the nature of
insurance, contribution or indemnification in respect of any Liability, in each
of cases (a), (b) and (c), net of any applicable premium adjustments (including
reserves or retentions and retrospectively rated premium adjustments) and net of
any costs or expenses incurred in the collection thereof.

 

  1.70

“Intellectual Property” means all intellectual property rights throughout the
world, including: (a) patents and patent applications and all related
provisionals, divisionals, continuations, continuations-in-part, reissues,
reexaminations, extensions and substitutions of any of the foregoing;
(b) trademarks, service marks,

 

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  names, corporate names, trade names, domain names, social media names, tags or
handles, logos, slogans, trade dress, design rights, and other similar
designations of source or origin, together with the goodwill symbolized by any
of the foregoing, whether or not registered or applied for registration,
including common law trademark rights; (c) copyrights and copyrightable subject
matter, whether or not registered or applied for registration; (d) technical,
scientific, regulatory and other information, designs, ideas, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
research and development, discoveries, results, creations, improvements,
know-how, techniques and data (including biological, chemical, pharmacological,
toxicological, pharmaceutical, physical and analytical, safety, quality control,
manufacturing and preclinical and clinical data), technology, algorithms,
procedures, plans, processes, practices, methods, trade secrets, instructions,
formulae, formulations, compositions, specifications, and marketing, pricing,
distribution, cost and sales information, tools, materials, apparatus,
creations, improvements, works of authorship in any media, confidential,
proprietary or nonpublic information, and other similar materials, and all
recordings, graphs, drawings, reports, analyses and other writings, and other
tangible embodiments of the foregoing in any form whether or not listed herein,
in each case, other than Software; (e) Software; and (f) applications,
registrations and common law rights for the foregoing.

 

  1.71

“JAC Chair” shall have the meaning set forth in Section 9.2(b).

 

  1.72

“JAC Meeting” shall have the meaning set forth in Section 9.3(a).

 

  1.73

“JAC Member” shall have the meaning set forth in Section 9.2(a).

 

  1.74

“Joint Advisory Committee” or “JAC” shall have the meaning set forth in
Section 9.1.

 

  1.75

“Late Payment Date” shall have the meaning set forth in Section 3.5.

 

  1.76

“Latent Defects” shall have the meaning set forth in Section 4.8(a).

 

  1.77

“Laws” means any U.S. and non-U.S. federal, national, international,
multinational, supranational, state, provincial, local or similar law (including
common law and privacy and data protection laws), statute, ordinance,
regulation, rule, code, order, treaty (including any tax treaty on income or
capital), binding judicial or administrative interpretation or other requirement
or rule of law or legal process, in each case, enacted, promulgated, issued,
entered or otherwise put into effect by a Governmental Authority or any rule or
requirement of any securities exchange.

 

  1.78

“Losses” means any and all damages, losses, deficiencies, Liabilities, Taxes,
obligations, penalties, judgments, settlements, claims, payments, fines,
charges, interest, costs and expenses, whether or not resulting from Third-Party
Claims, including the costs and expenses of any and all Actions and demands,
assessments, judgments, settlements and compromises relating thereto and the
reasonable costs and expenses of attorneys’, accountants’, consultants’ and
other professionals’ fees and expenses incurred in the investigation or defense
thereof or the enforcement of rights hereunder.

 

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  1.79

“Make to Order Products” means all Products that are identified as “Make to
Order Products” in the applicable Facility Addendum.

 

  1.80

“Manufacturer” shall have the meaning set forth in the Preamble.

 

  1.81

“Manufacturer Indemnified Party” shall have the meaning set forth in
Section 10.2(a).

 

  1.82

“Manufacturer-Owned Improvements and Developments” shall have the meaning set
forth in Section 8.2(c).

 

  1.83

“Manufacturer Third Party Suppliers” shall have the meaning set forth in
Section 2.7(a).

 

  1.84

“Manufacturing Change” shall have the meaning set forth in Section 4.3(a).

 

  1.85

“Minimum Order Quantity” shall have the meaning set forth in the applicable
Facility Addendum with respect to each Product.

 

  1.86

“Non-Complying Buy-Sell Materials” means any Buy-Sell Material that, as of or
prior to its delivery by or on behalf of Customer or its Affiliate to
Manufacturer or its Affiliate or designee pursuant to this Agreement, does not
comply in all material respects with, or has not been used, handled or stored in
all material respects in accordance with, the specifications for such Buy-Sell
Material, all applicable Laws, cGMP, the Quality Agreement, this Agreement or
the applicable Facility Addendum.

 

  1.87

“Non-Complying Customer-Supplied Materials” means any Customer-Supplied Material
that, as of or prior to its delivery by or on behalf of Customer or its
Affiliate to Manufacturer or its Affiliate or designee pursuant to this
Agreement, does not comply in all material respects with, or has not been used,
handled or stored in all material respects in accordance with, the
specifications for such Customer-Supplied Material, all applicable Laws, cGMP,
the Quality Agreement, this Agreement or the applicable Facility Addendum.

 

  1.88

“Non-Complying Product” shall have the meaning set forth in Section 4.7.

 

  1.89

“Party” or “Parties” shall have the meaning set forth in the Preamble.

 

  1.90

“Person” means an individual, a general or limited partnership, a corporation, a
trust, a joint venture, an unincorporated organization, a limited liability
entity, any other entity and any Governmental Authority.

 

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  1.91

“Personnel” means, with respect to a Party, such Party’s Affiliates, contractors
and agents together with such Party’s and its Affiliates’, contractors’ and
agents’ respective individual employees, contractors and other agents.

 

  1.92

“Pluto” shall have the meaning set forth in the Recitals.

 

  1.93

“Price” means, with respect to a Product:

 

  (a)

during the Initial Price Term, the Initial Price of such Product; and

 

  (b)

after the Initial Price Term, the adjusted price for such Product, as calculated
on a Fiscal Year basis, in accordance with Section 3.2.

 

  1.94

“Product” means a product specified in the applicable Facility Addendum which,
for the avoidance of doubt, includes all applicable SKUs of such product, in
each case, as the same may be amended from time to time by the mutual written
agreement of the Parties; provided that, upon Customer’s request, the Parties
shall discuss in good faith any amendments to the applicable Facility Addendum
to add Product SKUs and any related information thereto.

 

  1.95

“Product Conversion Cost” means, with respect to a given Product, the total
units of such Product anticipated to be shipped or actually shipped, as
applicable, during a given Fiscal Year (determined in a manner consistent with
Manufacturer’s customary practices) multiplied by the per-unit Conversion Cost
for such Product for such Fiscal Year.

 

  1.96

“Product Materials” means all raw materials (including, without limitation,
active pharmaceutical ingredients and excipients), labeling or packaging
materials and components needed for the manufacture and supply of a given
Product. For the avoidance of doubt, Product Materials are distinguishable from
and exclusive of both Buy-Sell Materials and Customer-Supplied Materials.

 

  1.97

“Product SKU” means the specific Stock Keeping Unit (SKU) number for a given
Product supplied for sale in a given country or region in the applicable
Territory, in each case, as such SKU number may be updated from time to time.

 

  1.98

“Purchase Order” means a written or electronic order form submitted by Customer
in accordance with the terms of this Agreement to Manufacturer authorizing the
manufacture and supply of a given Product.

 

  1.99

“Quality Agreement” means those supplemental quality provisions set forth in any
Quality Agreement between Manufacturer and Customer relating to a Facility, as
the same may be amended or modified from time to time by mutual written
agreement of the Parties. The form of Quality Agreement for each Facility is
attached hereto as Attachment B.

 

  1.100

“Recall” means a “recall”, “correction” or “market withdrawal” and shall include
any post-sale warning or mailing of information.

 

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  1.101

“Receiving Site” shall have the meaning set forth in Section 2.10(a).

 

  1.102

“Record Retention Period” shall have the meaning set forth in Section 15.1.

 

  1.103

“Records” means any books, documents, accounting procedures and practices and
other data, regardless of type or form, of all matters relating to
Manufacturer’s performance of its obligations under this Agreement that enable
Manufacturer to demonstrate compliance with such obligations, including, without
limitation, Manufacturer’s compliance with applicable Laws.

 

  1.104

“Regulatory Approvals” means the permit, approval, consent, registration,
license, authorization or certificate of a Governmental Authority necessary for
the manufacturing, distribution, use, promotion and sale of a Product for one or
more indications in a country or other regulatory jurisdiction, including
approval of New Drug Applications and Biologics License Applications (each as
defined by applicable Law) in the United States and Marketing Authorizations (as
such term is defined by applicable Law) in the European Union.

 

  1.105

“Release” means any release, spill, emission, leaking, dumping, pumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into or through the indoor or outdoor environment (including ambient
air, surface water, groundwater, land surface or subsurface strata, soil and
sediments) or into, through or within any property, building, structure, fixture
or equipment.

 

  1.106

“Restricted Markets” means, as applicable and as may be updated from time to
time, in each case, under Global Trade Control Laws, the Crimean Peninsula,
Cuba, the Donbass Region, Iran, North Korea, and Syria.

 

  1.107

“Restricted Party” means any: (a) individual or entity placed on lists
maintained by an applicable Governmental Authority, including those established
under the Act, the List of Excluded Individuals / Entities published by the U.S.
Health and Human Services Office of Inspector General, the regulations
administered by the U.S. Department of the Treasury Office of Foreign Assets
Control, the U.S. Department of Commerce Bureau of Industry and Security, or
similar lists of restricted parties maintained by the Governmental Authorities
of the countries that have jurisdiction over the activities conducted under this
Agreement; (b) individual or entity suspended or debarred from contracting with
the U.S. government; or (c) any entity in the aggregate owned or controlled,
directly or indirectly, fifty percent (50%) or greater by one or more such
individuals or entities described in clause (a).

 

  1.108

“Separation” shall have the meaning set forth in the Recitals.

 

  1.109

“Separation Agreement” shall have the meaning set forth in the Recitals.

 

  1.110

“Serialization” means the assigning of a unique identification code on a given
Product unit or Product units of sale at the primary, secondary and/or tertiary
level for the purpose assuring authenticity and/or tracking and tracing of the
movement of a given Product through the entire supply chain.

 

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  1.111

“Service Taxes” shall have the meaning set forth in Section 3.6(b).

 

  1.112

“Specifications” means the specifications for the manufacture, processing,
packaging, labeling, testing and testing procedures, shipping, storage and
supply of a given Product, including all formulae, know-how, raw materials
requirements, analytical procedures and standards of quality control, quality
assurance and sanitation, set forth with respect to such Product in the
applicable Regulatory Approval(s) and provided by Customer to Manufacturer.

 

  1.113

“Spinco” shall have the meaning set forth in the Recitals.

 

  1.114

“Standard Cost” means, with respect to a given Product in a given Fiscal Year,
an amount equal to:

 

  (a)

the cost of Product Materials (including the cost of active ingredients,
intermediates, semi-finished materials, excipients and primary and secondary
packaging) associated with such Product (“Standard Product Materials Cost”); and

 

  (b)

the Conversion Costs for such Product (“Standard Conversion Cost”),

in each case of clauses (a) and (b), calculated in accordance with
Manufacturer’s accounting policies in effect as of the Effective Date and
applied consistently across Manufacturer’s entire manufacturing operations for
the full applicable Facility. Depreciation will be based on original acquisition
cost of fixed assets, and not impacted by fair value accounting for business
transactions.

 

  1.115

“Technical Support” shall have the meaning set forth in Section 2.10(a).

 

  1.116

“Term” shall have the meaning (a) with respect to this Agreement, as set forth
in Section 7.1 and (b) with respect to a Facility Addendum, as set forth in
Section 7.2.

 

  1.117

“Territory” means, with respect to a given Product, the countries set forth in
the applicable Facility Addendum for such Product.

 

  1.118

“Third Party” means a Person other than Manufacturer, Customer or their
respective Affiliates.

 

  1.119

“Third-Party Claim” shall have the meaning set forth in Section 10.3(a).

 

  1.120

“Triggering Event” shall have the meaning set forth in Section 2.5(a).

 

  1.121

“VAT” means (A) any Tax imposed in compliance with the council directive of
28 November 2006 on the common system of value added tax (EC Directive
2006/112); and (B) any other Tax of a similar nature, however denominated, to
the Taxes referred to in clause (A) above, whether imposed in a member state of
the European Union in substitution for, or levied in addition to, the Taxes
referred to in clause (A) above, or imposed elsewhere (including goods and
services Taxes, but excluding transfer Tax, stamp duty and other similar Taxes).

 

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  1.122

“VMR Products” means all Products that are identified as “VMR Products” in the
applicable Facility Addendum.

 

  1.123

“Waste” means all wastes that arise from the manufacture, handling or storage of
Product hereunder, or which is otherwise produced through the implementation of
this Agreement, including Hazardous Materials.

 

2.

Supply of Product.

 

  2.1

Agreement to Supply.

 

  (a)

Affiliates and Facility Addenda. Either the entity designated above as Customer
or any Affiliate of Customer and either the entity designated above as
Manufacturer or any Affiliate of Manufacturer may enter into Facility Addenda
under this Agreement. The entities that execute a Facility Addendum are also
deemed to be “Customer” and “Manufacturer” (respectively) for all purposes of
the Facility Addendum and this Agreement (with respect to the applicable
Facility Addendum).

 

  (b)

Supply Pursuant to Facility Addenda. During the Term of each Facility Addendum,
Manufacturer shall manufacture and supply Product to Customer for the Territory
applicable to such Product on the terms and subject to the conditions of this
Agreement and the applicable Facility Addendum. The terms of this Agreement
shall be incorporated by reference into each Facility Addendum that may be
executed by the Parties or, as described in Section 2.1(a), their respective
Affiliates. During the term of this Agreement, Customer may request that
Manufacturer manufacture and supply to Customer clinical trial material, and the
Parties shall negotiate in good faith the terms and conditions of such
manufacturing and supply arrangement applying the terms and conditions of this
Agreement to the extent mutually agreeable.

 

  (c)

Hierarchy of Terms; Effect of Amendments. In the event of a conflict between the
terms of any Facility Addendum and the terms of this Agreement, the terms of
this Agreement shall govern and control, except to the extent that the
applicable Facility Addendum expressly and specifically states an intent to
supersede a specific section of this Agreement on a specific matter. Any
amendment to the terms of this Agreement contained in a Facility Addendum shall
be effective solely with respect to such Facility Addendum, and not with respect
to this Agreement or any other Facility Addendum. Any amendment to the terms of
this Agreement shall be effective with respect to all Facility Addenda. Except
to the extent otherwise expressly stated in this Agreement, in the event of a
conflict between the terms of this Agreement and the terms of the Separation
Agreement, the terms of the Separation Agreement shall govern and control.

 

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  (d)

Use of Subcontractors. Subject to Section 2.2(a), Manufacturer shall manufacture
and supply Product itself or through its Affiliates, in each case, at the
applicable Facilities (and such other facilities as may be specified in the
applicable Facility Addendum with respect to applicable Products). With respect
to those Third-Party contractors, subcontractors or service providers used by
Manufacturer or its Affiliates in the manufacturing or supply of a given Product
immediately prior to the Effective Date, Manufacturer may engage such
Third-Party contractors, subcontractors or service providers to perform the same
activities for such Product under this Agreement without first obtaining
Customer’s prior written consent. For the avoidance of doubt, the use of any
Third-Party contractors, subcontractors or service providers other than in the
manner expressly permitted pursuant to this Section 2.1(d) must be approved in
advance in writing by Customer, such approval not to be unreasonably withheld,
conditioned or delayed. Manufacturer shall be liable for all actions and
omissions of its contractors, subcontractors and service providers, and any
breach of the terms and conditions of this Agreement by such contractors,
subcontractors or service providers shall be deemed a breach of the terms and
conditions by Manufacturer under this Agreement. For the avoidance of doubt, as
of the Effective Date, as between Manufacturer and Customer, Manufacturer will
be solely responsible for maintaining and establishing relationships with the
Third-Party contractors, subcontractors or service providers used in the
manufacturing or supply of Product (other than the manufacturing or supply of
Buy-Sell Materials or Customer-Supplied Materials).

 

  (e)

Exclusivity.

 

  (i)

Customer Exclusivity. During the Exclusivity Period, on a Product SKU-by-Product
SKU and country-by-country basis within the applicable Territory, Customer shall
purchase from Manufacturer, in accordance with the terms and conditions of this
Agreement, at least the Exclusive Purchase Requirement of its requirements for
such Product SKU in such country; provided, however, that In-Flight or Shared
Volume Products shall be excluded from the exclusivity requirements set forth in
this Section 2.1(e)(i). Following the Exclusivity Period (and during the
Exclusivity Period, with respect to Product SKU quantities in excess of the
Exclusive Purchase Requirement in accordance with the preceding sentence),
nothing in this Agreement shall prevent Customer or any of its Affiliates from
manufacturing Product for itself, or having Product manufactured by a Third
Party, including in amounts in addition to the Purchase Orders for Product
issued to Manufacturer in accordance with this Agreement. For clarity and
notwithstanding

 

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  anything contained herein, nothing in this Section 2.1(e)(i) (A) is intended
to be inconsistent with Section 2.4(e)(i) or to otherwise indicate that Customer
is subject to any requirement to purchase Product under this Agreement or (B) is
intended to prevent Customer from qualifying a back-up supplier for any Product
during the Exclusivity Period.

 

  (ii)

Upon request by Manufacturer, which Manufacturer may make from time to time
during the Term but not more than once during any quarter of a Fiscal Year,
Customer shall provide to Manufacturer within thirty (30) days of such request a
certification attesting to Customer’s compliance with its Exclusive Purchase
Requirement obligations pursuant to Section 2.1(e)(i) and signed by a
representative of Customer with a title of Vice President or more senior.

 

  2.2

Use of Facility, Equipment, Molds and Tooling.

 

  (a)

Facilities. For each Product, Manufacturer shall perform all manufacturing
activities and all storage activities at the Facilities set forth in the
Facility Addendum applicable to such Product. Manufacturer may use any other
facility for the manufacture and storage of Products if (i) such facility has
been approved for such manufacture by all applicable Governmental Authorities
and (ii) Manufacturer obtains Customer’s prior written consent with respect to
the use of such other facility as set forth in Section 4.3(a) (such approval not
to be unreasonably withheld, conditioned or delayed). The Parties shall agree to
either execute a new Facility Addendum or amend an existing Facility Addendum in
order to include such facility. Manufacturer shall notify Customer of its intent
to use any alternate facility as soon as reasonably practicable.

 

  (b)

Purchase and Installation of Equipment, Dedicated Change Parts and Tooling.
Subject to this Section 2.2(b), Manufacturer shall be responsible for
(i) purchasing, installing and validating at the Facilities all new equipment,
dedicated change parts and tooling; (ii) modifications to existing equipment,
dedicated change parts and tooling necessary for the manufacture, packaging,
labeling and Delivery of Product hereunder; and (iii) maintenance of all such
equipment, dedicated change parts and tooling, and all costs and expenses
associated therewith; provided that in no event shall Manufacturer be required
to purchase any new equipment, install any equipment purchased or requested by
Customer or add (or, for clarity, allocate or dedicate) any additional
manufacturing or storage capacity in connection with Customer’s requests for
additional capacity for manufacturing or for other activities to be carried out
by Manufacturer hereunder not otherwise expressly provided for hereunder or in
an applicable Facility Addendum. If Customer makes such a request for additional
equipment or capacity, then the Parties shall promptly meet and discuss
Customer’s request in good faith, including an appropriate allocation of costs
between the Parties with respect thereto.

 

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  2.3

Capacity.

Subject to Section 2.2(b), Manufacturer shall devote adequate manufacturing
capacity to be capable of manufacturing and supplying Product to Customer in
accordance with the provisions of this Agreement and the Facility Addenda.
Manufacturer shall promptly notify Customer if Manufacturer reasonably believes
its existing capacity and demands thereon would prevent it from meeting
Customer’s anticipated Product requirements as set forth in any Forecast that
conforms to the requirements set forth in Section 2.4.

 

  2.4

Forecasts and Purchase Orders.

 

  (a)

VMR Products Forecasting and Purchase Orders. With respect to the VMR Products,
the processes and mechanisms by which Forecasts are prepared and Purchase Orders
are issued shall be as set forth in the applicable Facility Addenda and the
remainder of this Section 2.4 shall not apply with respect to such VMR Products
as applicable.

 

  (b)

Make to Order Product Forecasts. Except as otherwise set forth in a Facility
Addendum, in each calendar month during the Term of a Facility Addendum,
Customer shall provide to Manufacturer a rolling Product SKU-level forecast of
its estimated requirements of Make to Order Products for the eighteen (18)-month
period commencing with the month in which such forecast is provided (each, a
“Forecast”). In the event Customer delivers a Forecast where the allocation of
Product requirements over the time period of the Forecast are not consistent
with historical trends, at Manufacturer’s request, the Parties will meet to
discuss the Forecast in good faith in the context of previous allocations of
Product requirements. Such Forecasts represent Customer’s reasonable estimates
of the quantity of Products it will require during the applicable period covered
by each such Forecast. Except as otherwise set forth in a Facility Addendum,
each Forecast shall be a non-binding forecast and for informational purposes
only, except that: (i) the portion of such Forecast covering the first three
(3) calendar months reflected therein (the “Binding Forecast Period”) shall be
binding and shall constitute a firm order for the quantity of each Product
specified therein (each, a “Firm Order”), (ii) each of months four (4) through
six (6) of a given Forecast may not differ by more than twenty-five percent
(25%) (whether positive or negative) from the quantity of such Product set forth
in those months in the previous Forecast, and (iii) each of months seven
(7) through twelve (12) of a given Forecast may not differ by more than fifty
percent (50%) (whether positive or negative) from the quantity of such Product
set forth in those months in the previous Forecast. For the avoidance of doubt,
(1) this subsection (b) applies to Forecasts for API and Bulk Drug Product and
(2) the Forecast with respect to Finished Product shall apply to the roll-up
level of the Bulk Drug Product that is incorporated into the Finished Product.

 

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  (c)

Make to Order Purchase Orders. Manufacturer shall provide Product to Customer
pursuant to Purchase Orders issued by Customer to Manufacturer, which Purchase
Orders will be issued on a Product SKU-by-Product SKU basis, not to exceed one
(1) Purchase Order per Product SKU per calendar month unless otherwise agreed
between the Parties in advance in writing. No verbal communications or e-mail
shall be construed to mean a commitment to purchase Product. Customer shall be
required to order pursuant to a Purchase Order at least the amount of Product
set forth in the Firm Order for such Product in the applicable calendar month.
Manufacturer shall provide to Customer such quantities of Product as may be
ordered by Customer pursuant to such Purchase Orders, up to one hundred ten
percent (110%) of the quantity set forth in the most recent Forecast for the
applicable period. In the event that Customer orders quantities of Product above
one hundred ten percent (110%) of the quantity set forth in the most recent
Forecast for the applicable period (such quantities above one hundred ten
percent (110%) referred to as “Additional Quantities”), Manufacturer shall use
its commercially reasonable efforts, but shall not be obligated, to supply such
Additional Quantities. For purposes of this paragraph, the most recent Forecast
for any given month shall mean the Forecast submitted by Customer in the month
prior to the month in which the applicable Purchase Order is issued. All
Purchase Orders shall specify the quantity and description of Products ordered,
the applicable Facility where such Products will be Delivered, the required
delivery date (subject to the provisions of Section 2.4(d)), and the manner of
Delivery (including the carrier to be used).

 

  (d)

Delivery Date. Unless expressly set forth to the contrary in a Facility
Addendum, Customer will issue Purchase Orders for Product no later than a period
equal to the Binding Forecast Period prior to the required delivery date. By way
of example only, if the Binding Forecast Period is the first three (3) months of
a Forecast with respect to a Product, then Customer will issue Purchase Order
for such Product no later than three (3) months prior to the required delivery
date.

 

  (e)

No Minimum Purchase Obligation; Minimum Order Quantities.

 

  (i)

No Obligation. Without limiting Customer’s obligations under Section 2.1(e),
2.4(b), 2.4(c), 2.4(d) or 2.4(e)(ii), Manufacturer hereby acknowledges and
agrees that Customer is not otherwise obligated to purchase any minimum or
specific quantity, volume or dollar amount of Product under any Facility
Addendum unless expressly set forth in the applicable Facility Addendum.

 

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  (ii)

Minimum Order Quantities. Notwithstanding Section 2.4(e)(i), Customer
acknowledges and agrees that (A) each Purchase Order Customer places hereunder
for Product that is either API or Bulk Drug Product shall be equal to, or a
whole multiple of, the Batch Size for such applicable Product as set forth in
the applicable Facility Addendum and (B) each Purchase Order that Customer
places hereunder for Product that is Finished Product shall be equal to or
greater than the Minimum Order Quantity for such applicable Product as set forth
in the applicable Facility Addendum; provided that, where Customer places
Purchase Orders under (B) above that exceed the applicable Minimum Order
Quantity, Customer shall place such Purchase Orders for such excess quantities
in Increments above the Minimum Order Quantity as specified in the applicable
Facility Addendum. As used herein, “Batch Size” means the production quantity
for a given run of a Product SKU and “Increments” means the quantity step change
above the applicable Minimum Order Quantity, in each case, as specified in the
applicable Facility Addendum.

 

  (f)

Acceptance and Rejection of Orders. Within ten (10) Business Days of receipt of
a Purchase Order, Manufacturer may reject such Purchase Order by written notice
to Customer only on the basis that it is inconsistent with the terms of this
Agreement, including a Purchase Order containing (i) a delivery schedule that is
inconsistent with Section 2.4(d), (ii) a Product quantity that is inconsistent
with Section 2.4(e)(ii), (iii) a Product quantity that is less than the Firm
Order for the applicable period or (iv) subject to Section 2.4(c), a Product
quantity that is more than one hundred ten percent (110%) of the Forecast for
the applicable period. Manufacturer shall be deemed to have accepted Customer’s
Purchase Order for Products in the event it either (a) indicates its acceptance
of Customer’s Purchase Order in writing or (b) does not indicate its rejection
of a Purchase Order within ten (10) Business Days of receipt pursuant to this
Section 2.4(f).

 

  (g)

Changes to Purchase Orders. Purchase Orders, once submitted to Manufacturer, may
be amended only by mutual written agreement of the Parties; provided that
Manufacturer shall exercise its commercially reasonable efforts to comply with
proposed amendments to Purchase Orders that Customer may request after sending a
Purchase Order to Manufacturer.

 

  (h)

Cancellations. In the event that Customer cancels all or part of a Purchase
Order (provided that a cancellation shall be deemed to have occurred to the
extent that Customer fails to issue a Purchase Order with respect to the full
amount of Product contemplated by any portion of a Forecast with respect to the
Binding Forecast Period) and such cancellation is not due to Manufacturer’s
breach of this Agreement or any Facility Addendum, Manufacturer will use good
faith efforts to reallocate capacity and mitigate any resultant costs of such
cancellation and, unless otherwise set forth with

 

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  respect to the relevant cancelled Product under the applicable Facility
Addendum, Customer will be charged for one hundred percent (100%) of any and all
non-cancellable Third-Party costs actually and reasonably incurred by
Manufacturer in accordance with this Agreement prior to cancellation for
materials or services related to the cancelled portion of the Purchase Order for
which reasonably acceptable documentation is submitted by Manufacturer to
Customer.

 

  (i)

Conflicts. In the event of any conflict between the provisions of this Agreement
and any Customer Purchase Order, Manufacturer’s acceptance form or
Manufacturer’s invoice form or any similar such forms, the provisions of this
Agreement shall govern and control.

 

  (j)

Product Inventory as of Effective Date. Promptly following the Effective Date,
Manufacturer shall provide Customer with a Product inventory report organized by
Facility, lot number, remaining shelf life, and such other data points with
respect to such Product inventory as Customer may request. For the avoidance of
doubt, (i) Manufacturer shall be entitled to fill Purchase Orders with such
inventory that complies with the terms and conditions of this Agreement,
including Section 5.2, and (ii) the Parties shall meet to discuss in good faith
the disposition of all such Product inventory that does not meet the criteria
set forth in (i) above.

 

  2.5

Failure to Supply.

 

  (a)

Capacity Allocation. In the event that Manufacturer fails to manufacture and
deliver Product in accordance with accepted Purchase Orders or applicable
Specifications, Manufacturer shall notify Customer promptly, including details
of the reasons for the failure and Manufacturer’s estimated timeline of when the
failure will be corrected. Manufacturer shall be solely responsible for
undertaking commercially reasonable measures to minimize any shortage of Product
delivered to Customer as a result of such manufacturing issues. If Manufacturer
fails to manufacture and deliver Product in accordance with accepted Purchase
Orders or applicable Specifications by the delivery date specified in the
applicable Purchase Order(s) in accordance with Section 2.4(d), other than due
to a Force Majeure Event, (i) for a period of two (2) or more months past such
delivery date four (4) or more times in any rolling twelve (12) month period, or
(ii) for a period of four (4) or more months past such delivery date on one
occasion (each of (i) and (ii), a “Triggering Event”), then Manufacturer shall
use its best efforts to allocate on a quarterly basis its manufacturing capacity
and Product Materials to the manufacture and supply of Products for Customer on
a ratable basis based on the use of each during the twelve (12)-month period
immediately preceding such Triggering Event (or either (1) the Term of the
applicable Facility Addendum, if the Term is less than twelve (12) months, or
(2) such other period set forth in the applicable Facility Addendum); provided
that (A) if Customer’s Minimum Order

 

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  Quantity for the applicable Product(s) exceeds its ratable allocation of
manufacturing capacity or Product Materials (as applicable) for the applicable
quarter, Customer shall continue to accrue its allocation of capacity until such
quarter when Customer’s allocation of capacity is equal to or greater than its
accrued allocation of capacity and (B) this Section 2.5(a) shall not apply to
the extent that Customer fails to timely provide adequate Customer-Supplied
Materials or Buy-Sell Materials to Manufacturer in accordance with Section 12.
For the avoidance of doubt, Manufacturer shall notify Customer promptly in
writing of any anticipated Triggering Event when Manufacturer has reason to
believe that such Triggering Event is likely to occur and provide such
information with respect to such anticipated Triggering Event as Customer may
reasonably request.

 

  (b)

Suspension of the Exclusive Purchase Requirement. In the event of a Triggering
Event, Customer’s Exclusive Purchase Requirement with respect to each and every
Product that is the subject of the Triggering Event shall be temporarily
suspended until such time as Manufacturer notifies Customer that Manufacturer is
able to resume the manufacture and supply of the subject Product(s) on the terms
and conditions of this Agreement (such period referred to as the “Exclusive
Purchase Requirement Suspension Period”); provided that, (i) during such
Exclusive Purchase Requirement Suspension Period, Customer shall use
commercially reasonable efforts to limit its orders for the subject Product(s)
to the quantities specified in the last Forecast that preceded the Triggering
Event for the applicable period(s) and promptly notify Manufacturer in the event
and to the extent that Customer’s orders exceed such quantities specified in
such Forecast and (ii) Customer shall be entitled to take delivery of Product(s)
ordered during the Exclusive Purchase Requirement Suspension Period even if such
delivery is scheduled for or actually occurs subsequent to the Exclusive
Purchase Requirement Suspension Period.

 

  (c)

Modification of the Exclusive Purchase Requirement. Upon the expiration of the
Exclusive Purchase Requirement Suspension Period, Customer shall use
commercially reasonable efforts to resume ordering from Manufacturer, on a
Product-by-Product basis, the subject Product(s) in accordance with Customer’s
Exclusive Purchase Requirement during the Exclusivity Period.

 

  (d)

Business Continuity. Manufacturer shall maintain a written business continuity
plan to be able to assure supply of Product to Customer in the event of a
disruption to supply from the primary location or Facility of manufacture,
including any disruption resulting from a Force Majeure Event and make such plan
available from time to time upon Customer’s request.

 

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  (e)

Remedies. Customer shall have the right to terminate this Agreement on an
affected Product-by-affected Product basis immediately upon written notice to
Manufacturer in the event a Triggering Event (under clause (ii) thereof)
continues for more than one hundred and eighty (180) days. Customer shall also
have the right to cancel orders for any quantities of Product affected by any
Triggering Event effective upon notice to Manufacturer, and Customer shall have
no further obligations to purchase any such cancelled quantities of Product. In
the event a Triggering Event occurs during the Exclusivity Period, Manufacturer
shall, at Manufacturer’s cost and expense, provide such assistance as is
reasonably requested by Customer to assist any alternate manufacturer in meeting
Customer’s requirements for the Product until Manufacturer has remedied the
cause of such Triggering Event and is able to supply Product to Customer in its
requested quantities. Such assistance shall include providing, subject in all
cases to Section 2.10(h), Technical Support in respect of the affected
Product(s). In the event of a Triggering Event, Manufacturer shall be liable for
any actual amounts that Customer is contractually required to pay to any
Third-Party customer of Customer that result from Customer’s inability to supply
the affected Product to such Third-Party customer as a direct result of such
Triggering Event; provided that (1) Customer shall provide to Manufacturer
appropriate evidence of such amounts (including invoices from the applicable
customers) and the applicable contractual requirements (redacted, in each case,
of information pertaining to pricing and other commercial terms that are not
directly related to the claimed amounts), it being understood and agreed that,
upon request, Manufacturer will enter into customary confidentiality
arrangements prior to such information being shared and (2) Manufacturer shall
not be liable for any such amounts in the aggregate in any Fiscal Year in excess
of the aggregate Conversion Cost Markup during such Fiscal Year with respect to
all Products manufactured at the Facility that is the subject of the applicable
Triggering Event. “Conversion Cost Markup” means, for a Product for any Fiscal
Year, ten percent (10%) of the product of (A) Manufacturer’s Standard Conversion
Cost for such Product for such Fiscal Year and (B) the quantity of such Product
ordered by Customer for delivery during such Fiscal Year. The rights of Customer
set forth in this paragraph are in addition to any other rights set forth in
this Agreement.

 

  2.6

Delivery; Risk of Loss.

 

  (a)

Delivery. Unless otherwise set forth in the applicable Facility Addendum,
Manufacturer shall deliver Product to Customer FCA (Incoterms 2010) at the
applicable Facility, and all Purchase Orders will be deemed to have been
completed when the quantity of Product made available to Customer at the
applicable Facility is between ninety percent (90%) and one hundred and ten
percent (110%) of the quantity of Product set forth in any accepted Purchase
Order (each such event, a “Delivery”). Delivery shall occur by or within the
delivery date(s) set forth in the applicable Purchase Order or such other date
as may be agreed to in writing by the Parties from time to time. Without
limiting Customer’s rights and remedies under Section 4.8, Manufacturer
acknowledges and agrees that, unless such early Delivery was agreed upon by the
Parties in writing, Manufacturer shall provide Customer with such data as
Customer may reasonably request from time to time for measures of key
performance indicators (KPI).

 

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  (b)

Certificates of Compliance. Manufacturer shall include certificates of
compliance and certificates of analysis with all Delivery of Product or prior to
Delivery upon reasonable request of Customer.

 

  (c)

Title. Unless otherwise set forth in the applicable Facility Addendum, title to
Product and risk of loss or damage shall pass to Customer upon Delivery to
Customer pursuant to Section 2.6(a).

 

  2.7

Procurement of Materials.

 

  (a)

Manufacturer shall order and maintain sufficient quantities of all Product
Materials, including safety stock as required by the applicable Facility
Addendum, to enable Manufacturer to manufacture and Deliver Product in
accordance with its Delivery obligations under this Agreement and the applicable
Facility Addendum. With respect to those Third Party suppliers of Product
Materials used by Manufacturer or its Affiliates in the ordinary course in the
manufacturing or supply of a given Product immediately prior to the Effective
Date (“Manufacturer Third Party Suppliers”), Manufacturer shall be permitted to
purchase solely the same Product Materials from such Manufacturer Third Party
Suppliers in connection with its activities under this Agreement without first
obtaining Customer’s prior written consent. Any other Third-Party supplier for
Product Materials (or procurement of a different Product Material from any
Third-Party supplier) must be approved in advance in writing by Customer (such
approval not to be unreasonably withheld, conditioned or delayed). For the
avoidance of doubt, as of the Effective Date, as between Manufacturer and
Customer, Manufacturer will be solely responsible for maintaining and
establishing relationships with the Third-Party suppliers of Product Materials.
The costs of all such Product Materials shall be included in the Price of the
applicable Product.

 

  (b)

Unless otherwise set forth in the applicable Facility Addendum for a specific
Product, Customer shall have no liability for excess or obsolete Product
Materials purchased by Manufacturer, (x) except as set forth in Section 2.4(h)
or Section 7.9 or (y) unless the excess or obsolescence is caused by a change to
the specifications for such Product Materials or the Specifications of a given
Product in accordance with this Agreement after such Product Materials have been
purchased by Manufacturer based upon a Firm Order or accepted Purchase Order).

 

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  (c)

Customer understands and acknowledges that (i) certain Product Materials have a
limited shelf-life, are long lead time items, and are subject to minimum order
quantities specified by the applicable supplier and (ii) Manufacturer will rely
on the Firm Orders and Forecasts to order Product Materials required to meet the
Firm Orders (plus safety stock for certain Product Materials of a Product as
reasonably determined by Manufacturer). In addition, Customer understands that,
to ensure an orderly supply of the Product Materials, Manufacturer may elect to
purchase the Product Materials in sufficient volumes to meet the production
requirements for Products during part or all of the forecasted periods;
provided, however, that Customer shall not have any liability with respect to
any purchase by Manufacturer or any of its Affiliates of labeling or packaging
materials (including labels, cartons and leaflets) in excess of the amount
required to meet the Firm Order applicable at such time plus the amount of
applicable Product forecasted to be ordered in months four (4) through six
(6) of the Forecast applicable at such time.

 

  (d)

Manufacturer must review with Customer any assessment made (or related action
proposed to be taken) by Manufacturer related to rejection or destruction of any
Customer-Supplied Materials, Buy-Sell Materials, Product, or Product Materials
intended for Customer’s Product to discuss viability for commercial use.

 

  2.8

Product Samples.

If representative lot samples of production batches of Product are requested by
Customer in order to satisfy its obligations under applicable Law, including any
regulatory requirements, or to any Governmental Authority, then Manufacturer
shall provide Customer (or any such Third Party as Customer shall designate)
with representative lot samples of each production batch of Product promptly
upon Customer’s request. Customer shall be entitled to review, upon reasonable
prior written notice, all manufacturing Records relating to such samples,
including all analytical procedures and cleaning validation relating to the
equipment used in connection with the manufacture of the samples. Such Product
samples shall be Delivered to Customer (or such Third Party as Customer shall
designate) in accordance with the provisions set forth in Section 2.6(a) and at
the Price as determined in accordance with the terms of Section 3. Customer
shall pay for such samples when invoiced in accordance with Section 3.5.

 

  2.9

Storage.

Manufacturer will store Products, Buy-Sell Materials, Product Materials, and
Customer-Supplied Materials in accordance with the requirements of the Quality
Agreement. With respect to those Third-Party warehouses used by Manufacturer or
its Affiliates in the ordinary course for the storage of a given Product,
Buy-Sell Materials, Product Materials, or Customer-Supplied Materials
immediately prior to the Effective Date, Manufacturer may engage such
Third-Party warehouse to perform the solely same activities for such Product,
Buy-Sell Materials, Product Materials, and Customer-Supplied Materials under
this Agreement without first obtaining Customer’s prior written consent. The use
of any Third Party warehouse

 

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for the storage of any Product, Buy-Sell Materials, Product Materials, or
Customer-Supplied Materials other than in the manner expressly permitted
pursuant to this Section 2.9 must be approved in advance in writing by Customer,
such approval not to be unreasonably withheld, conditioned or delayed.
Manufacturer shall obtain the right for Customer to audit, at Customer’s
expense, any such Third-Party warehouse upon reasonable prior advance written
notice and during normal business hours. Manufacturer has no obligation to store
Product more than fifteen (15) Business Days following the requested delivery
date for such Product; provided that (a) Manufacturer shall be obligated to
store Product for such longer period as may be reasonably necessary for Customer
to arrange transportation for such Product in the event that Manufacturer
experiences delays in the manufacture, release, or supply of a particular
Product that results in the delivery of a quantity of Product that exceeds
historical or Forecast quantities of Product for the applicable period and;
(b) with respect to any Product that Customer reasonably believes should not be
released by Manufacturer, Manufacturer shall store such Product until the
Parties’ definitive resolution pursuant to this Agreement and the Quality
Agreement as to whether such Product should be released. At the expiration of
the applicable time frame in the preceding sentence, notwithstanding any
provision of this Section 2.9 to the contrary, Manufacturer may transport and
store the subject Product at a Third-Party warehouse at Customer’s expense.

 

  2.10

Transitional Support.

 

  (a)

On a Product-by-Product basis, Customer may elect, upon written notice to
Manufacturer, for Manufacturer to provide Customer with reasonable technical
support, as more fully set forth in this Section 2.10, to transfer production of
a given Product or Products to a Customer facility or a facility of an
alternative source of supply as designated by Customer (such support, “Technical
Support” and such facility, the “Receiving Site”). Customer may make such
election for Technical Support at any time during the Term (including in the
event of a Triggering Event under Section 2.5(a) or in advance of any expiration
of this Agreement) or promptly after the termination or expiration of this
Agreement but in no event more than ninety (90) days following the effective
date of such termination or expiration. Such reasonable Technical Support shall
consist of:

 

  (i)

supply of a technical package to facilitate the transfer of all relevant
manufacturing information for such Product(s) to the Receiving Site, including
formulation descriptions, manufacturing instructions, Specifications, methods,
data required for applicable regulatory submissions and facility qualification,
and material supplier information, as applicable, except for any information
that is subject to confidentiality obligations owing to a Third Party; provided
that the technical package will not include any manufacturing information,
including formulation descriptions, manufacturing instructions, Specifications,
methods and material supplier information, that is generally available to or
known by the public, can be obtained on reasonable terms from Third Parties or
is already available or being utilized by Customer or its Affiliate at one of
Customer’s or its Affiliate’s facilities;

 

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  (ii)

host site visits to the Manufacturer’s Facility by Customer to observe
production of the applicable Product or Products, in each case, at a mutually
agreed date and subject to confidentiality procedures or requirements as may be
requested or implemented by Manufacturer; provided that the request for each
such visit shall be made so as to allow for sufficient advance preparation time
and can be accommodated in the requested timeframe without interruption to
Manufacturer’s routine production or operations;

 

  (iii)

performance of high-level consultation and answering reasonable queries for
Customer through the transfer process; and

 

  (iv)

provision of reasonable Product samples required under applicable Law for
transfer activities.

 

  (b)

Customer shall be responsible for identifying and requesting any and all
Technical Support that is required from Manufacturer to assure such technology
transfer is successful.

 

  (c)

The Parties shall reasonably cooperate and mutually agree to facilitate the
provision of any additional reasonable Technical Support with respect to the
applicable Product or Products to Customer, including assistance through the
transfer process, Manufacturer Personnel visits to the Receiving Site and
training and troubleshooting during the Receiving Site’s first production run of
the applicable Product or Products, in each case, as and to the extent
reasonably agreed by Manufacturer in each instance (and subject to Sections
2.10(d), 2.10(e) and 2.10(f)).

 

  (d)

The Parties will work together in good faith to plan for upcoming and ongoing
Technical Support needs and to accommodate such plans in order to maintain
ongoing business continuity. In addition, Manufacturer shall have no obligation
to hire or retain any individuals or make any capital expenditures in connection
with Technical Support, and Manufacturer’s obligation to provide Technical
Support is contingent upon the continued employment by Manufacturer of those
individuals capable of providing such Technical Support. Manufacturer may
terminate its obligation to provide any Technical Support with respect to the
applicable Product under this Agreement if Customer or any of its Affiliates
hires any Manufacturer Personnel involved in providing Technical Support to
Customer hereunder (without limiting any applicable non-solicitation obligations
of Customer pursuant to the Business Combination Agreement).

 

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  (e)

Customer shall be solely responsible for any and all regulatory or other
Governmental Authority requirements, activities and related costs and expenses
that arise in conjunction with any Technical Support, technology transfer of
production or production of each Product to or at the Receiving Site. These
activities may also include, but are not limited to, creation of additional data
or technical information, analytical method modifications or other work of a
technical nature required to support regulatory queries or contemporary
standards and guidelines driven by the manufacturing transfer (subject to
Section 8.2).

 

  (f)

Subject to Section 2.5(e), Customer is responsible for, and shall promptly
reimburse Manufacturer for, any and all reasonable out-of-pocket costs and
expenses incurred by or on behalf of Manufacturer in connection with any
Technical Support provided to Customer under this Agreement, including employee
costs to be charged at a rate that reasonably approximates the cost of providing
the Technical Support, without any intent to cause Manufacturer to make profit
or incur loss.

 

  (g)

With respect to each Product for which Manufacturer provides Technical Support
under this Agreement, Manufacturer shall provide to Customer any analytical
materials and methods in Manufacturer’s possession or control that are required
in connection with disclosures to any applicable Governmental Authority to
qualify the applicable Product Materials, Buy-Sell Materials, or
Customer-Supplied Materials for such Product or such Product itself for release
testing to meet the then-current applicable marketing authorization, in each
case, subject to Section 13.

 

  (h)

Nothing in this Agreement shall require Manufacturer to provide more than 75
hours per calendar year per Product in connection with any Technical Support.
Notwithstanding anything to the contrary herein, except as expressly provided in
Section 2.10(g), Manufacturer shall have no obligation to disclose, license or
otherwise provide confidential or proprietary information of Manufacturer, its
Affiliates or any Third Party in connection with this Agreement or any Technical
Support or technology transfer therein.

 

3.

Price; Payment; Price Adjustments; Taxes.

 

  3.1

Price.

 

  (a)

Initial Price. On a Fiscal Year-by-Fiscal Year basis, Customer shall purchase
each Product from Manufacturer at the Price for such Product for such Fiscal
Year, as determined in accordance with the terms of this Section 3. The Price
for each Product during the Initial Price Term (such Price, the “Initial Price”
for such Product) is set forth in the Facility Addendum for such Product.
Following the Initial Price Term, the Price of such Product may be adjusted only
as set forth in Section 3.1(b) and Section 3.2.

 

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  (b)

Price in Extension Periods. In the event that Customer elects to extend the
Initial Term of the Agreement or of a Facility Addendum, the Price for each
applicable Product in any Extension Period shall be one hundred percent (100%)
of Manufacturer’s Standard Product Materials Cost plus one hundred and ten
percent (110%) of Manufacturer’s Standard Conversion Cost of such Product, each
for the initial Fiscal Year of the first Extension Period with respect to such
Product. During each Extension Period, the Price of such Product may be adjusted
as set forth in Section 3.2; provided that the initial Fiscal Year of the first
Extension Period shall operate as the Facility Conversion Cost Baseline Fiscal
Year (as defined below).

 

  (c)

Subject to the limitations and conditions set forth in this Agreement, it is the
intention of the Parties that the Price of each Product reflects one hundred
percent (100%) of Manufacturer’s Standard Product Materials Cost plus one
hundred and ten percent (110%) of Manufacturer’s Standard Conversion Cost of
such Product. The Price for each Product will be set forth in the currency
specified in the applicable Facility Addendum.

 

  (d)

Changes to the Standard Cost Methodology. Manufacturer shall have the right to
change the Standard Cost methodology once per Fiscal Year; provided that any
change shall be consistent with the Accounting Method and applied across all
products manufactured at the applicable Facility. If Manufacturer elects to
change the Standard Cost methodology, Manufacturer shall calculate both (i) the
revised Standard Cost using the methodology effective during the then-current
Fiscal Year of the Term of the applicable Facility Addendum and (ii) the
percentage change in Standard Cost caused by the change in methodology relative
to the former methodology. If such Standard Cost methodology change results in
an increase of Facility Conversion Cost for Products manufactured for Customer
of more than two percent (2%), then Manufacturer shall revert to the former
methodology for purposes of the calculation of Price during such Fiscal Year.

 

  3.2

Price Adjustment.

 

  (a)

Product Materials Adjustment.

 

  (i)

On a Facility-by-Facility basis, with respect to each full Fiscal Year of the
Term of the applicable Facility Addendum, the Price of each Product manufactured
at the applicable Facility will be updated to reflect one hundred percent (100%)
of the full estimated amount of the increase or decrease in the cost of Product
Materials for each such Product.

 

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  (ii)

In each Fiscal Year of the Term of this Agreement, Manufacturer shall submit a
report to Customer by no later than the end of the first quarter of such Fiscal
Year setting out the Facility Actual Product Materials Cost with respect to each
Facility for the prior Fiscal Year. In the event that the Facility Actual
Product Materials Cost differs from the Facility Estimated Product Materials
Cost, when adjusted to reflect actual volume, then Manufacturer shall issue
either (A) an invoice to Customer for any amounts owed by Customer to
Manufacturer or (B) a credit memo for amounts owed by Manufacturer to Customer
reflecting the difference between the Price as invoiced and an adjusted Price
for such Fiscal Year; provided, however, that any such adjustment made in
accordance with the foregoing shall be subject in all cases to the provisions of
Section 3.2(e). Customer shall pay all undisputed amounts due in the currency
specified in the applicable Facility Addendum within forty-five (45) calendar
days from the date of the invoice. If Customer disputes all or any portion of an
invoice, it shall be required to pay only the amount not in dispute, and in such
event Customer shall notify Manufacturer of the amount and nature of the
dispute. Payment by Customer of any amount reflected in any invoice shall not
result in a waiver of any of Customer’s rights under this Agreement.

 

  (b)

Conversion Cost Adjustments.

 

  (i)

Subject to the remainder of this Section 3.2(b), on a Facility-by-Facility
basis, if the Facility Conversion Costs of a Facility during any Fiscal Year
following the first full Fiscal Year of the Term of the applicable Facility
Addendum (such Fiscal Year, a “Facility Conversion Cost Adjustment Fiscal Year”)
are estimated to be (a) less than seventy-five percent (75%) of the Facility
Conversion Costs for the Facility Conversion Cost Baseline Fiscal Year (as
defined below) or (b) greater than one hundred and twenty-five percent (125%) of
the Facility Conversion Costs for the Facility Conversion Cost Baseline Fiscal
Year (clauses (a) and (b) referred to collectively as the “Facility Conversion
Cost Threshold”), when adjusted to reflect a constant volume between the
Facility Conversion Cost Adjustment Fiscal Year and the Facility Conversion Cost
Baseline Fiscal Year, then the Price for such Product will be updated beginning
with such Facility Conversion Cost Adjustment Fiscal Year to reflect one hundred
and ten percent (110%) of the increase or decrease in Facility Conversion Costs.
An example calculation of the foregoing Price adjustment is attached hereto as
Attachment G. Subject to the last sentence of Section 3.1(b), the “Facility
Conversion Cost Baseline Fiscal Year” shall be, as of the Effective Date, 2019
budget volumes and costs as summarized in the applicable Facility Addenda;
provided that in each instance in which the Price is adjusted in accordance with
the immediately preceding sentence of this Section 3.2(b)(i), the Facility
Conversion Cost Baseline Fiscal Year shall be the applicable Facility Conversion
Cost Adjustment Fiscal Year.

 

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  (ii)

In the event that Price is adjusted as a result of a change to Facility
Conversion Cost under Section 3.2(b)(i), the Facility Conversion Cost Threshold
for all remaining Fiscal Years in the Initial Term (or Extension Periods as
appropriate) will be reduced such that if Facility Conversion Costs of a
Facility during any Facility Conversion Cost Adjustment Fiscal Year are
estimated to be (a) less than eighty percent (80%) of the Facility Conversion
Costs for the Facility Conversion Cost Baseline Fiscal Year or (b) greater than
one hundred and twenty percent (120%) of the Facility Conversion Costs for the
Facility Conversion Cost Baseline Fiscal Year, then the Price for such Product
will be updated beginning with such Facility Conversion Cost Adjustment Fiscal
Year to reflect the full estimated amount of the increase or decrease in
Conversion Cost.

 

  (iii)

Notwithstanding anything to the contrary in this Section 3.2(b), Manufacturer
shall not have the ability to adjust the Price to reflect actual volume for
Products in a Facility to the extent that Customer has reduced its demand for
one or more Products in such Facility due to Manufacturer’s breach of or other
failure to supply under this Agreement or the applicable Facility Addendum.

 

  (iv)

In each Fiscal Year following the first full Fiscal Year of the Term of this
Agreement, Manufacturer shall submit a report to Customer by no later than the
end of the first quarter of such Fiscal Year setting out the actual volume of
Product for each Facility for the prior Fiscal Year. In the event that the
actual Facility Conversion Costs demonstrate that the then applicable Facility
Conversion Cost Threshold has been exceeded, and Manufacturer had not previously
adjusted the applicable Price in accordance with this Section 3.2(b) to account
for such adjustment, then Manufacturer shall either issue (A) an invoice to
Customer for any amounts owed by Customer to Manufacturer or (B) a credit memo
for amounts owed by Manufacturer to Customer reflecting the difference between
the Price as invoiced and the adjusted Price for such Fiscal Year; provided,
however, that any such adjustment made in accordance with the foregoing shall be
subject in all cases to the provisions of Section 3.2(b)(iii). For clarity, any
amount owed by Customer to Manufacturer or owed by Manufacturer to Customer
shall be one hundred and ten percent (110%) of Manufacturer’s Conversion Cost,
reduced by a 20% allowance for variable costs. Customer shall pay all undisputed
amounts due in the currency specified in the applicable Facility Addendum within
forty-five (45) calendar days

 

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  from the date of the invoice. If Customer disputes all or any portion of an
invoice, it shall be required to pay only the amount not in dispute, and in such
event Customer shall notify Manufacturer of the amount and nature of the
dispute. Payment by Customer of any amount reflected in any invoice shall not
result in a waiver of any of Customer’s rights under this Agreement.

 

  (c)

Notwithstanding the above, the price for Buy-Sell Materials will be updated
annually in each year following the first Fiscal Year to reflect one hundred
percent (100%) of the full estimated amount of the cost of Buy-Sell Materials to
Manufacturer. Customer may not change the price of Buy-Sell materials during any
Fiscal Year. Upon any notification by Customer to Manufacturer of any reduction
in the price of Buy-Sell Materials for the upcoming Fiscal Year, Manufacturer
shall submit to Customer an inventory of such Buy-Sell Materials on hand and a
calculation of the positive difference between the aggregate price for such
Buy-Sell Materials applying the price for the current Fiscal Year and the
aggregate price for such Buy-Sell Materials applying the price for the upcoming
Fiscal Year. Customer shall promptly and in no event later than forty-five
(45) days issue to Manufacturer a credit memo in the amount of such positive
difference reflected in Manufacturer’s notice.

 

  (d)

The increases or decreases described in this Section 3.2 shall be determined by
Manufacturer in a manner consistent with the accounting methodologies used by
Manufacturer as of the Effective Date and shall be based on the applicable
Forecasts provided by Customer in July of the applicable Fiscal Year and applied
consistently across Manufacturer’s entire manufacturing operations for the full
Facility.

 

  (e)

Manufacturer shall notify Customer of any estimated expected changes to Prices
for the upcoming Fiscal Year by no later than June 1 of the then-current Fiscal
Year and shall notify Customer of any actual changes to Prices for the upcoming
Fiscal Year by no later than October 30 of the then-current Fiscal Year. Between
June 1 and October 30, the Parties will engage in ongoing discussions to ensure
that any final changes to Prices for the applicable Fiscal Year conform to the
terms and conditions of this Agreement. Manufacturer will promptly respond to
Customer’s inquiries regarding any proposed changes to the Price of Products and
provide reasonable documentation to Customer supporting the estimated or actual
change in such Prices. Any actual, adjusted Price of each Product shall become
effective on the first day of the first month of such upcoming Fiscal Year.

 

  (f)

Any disputes relating to changes in Price for a given Product will be resolved
pursuant to Section 3.4.

 

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  3.3

Cost Improvement.

At Customer’s reasonable request, Manufacturer and Customer agree to discuss in
good faith the implementation of possible cost reduction opportunities with the
objective to reduce the net Price of Product. Without limiting the generality of
the foregoing, Manufacturer shall use commercially reasonable efforts to reduce
the price of Product Materials.

 

  3.4

Price Review and Audit Procedure.

 

  (a)

Manufacturer shall maintain complete and accurate Records that fairly reflect
the relevant costs and calculations used to determine the Price of each Product
and shall retain such Records for a period of not less than three (3) years
after the applicable Product was manufactured and delivered hereunder. With
respect to a Price change under Section 3.2 for any Product in an upcoming
Fiscal Year, if Customer requests such a review in writing within thirty
(30) days following notice to Customer of such change, then: (i) the Parties
shall reasonably discuss and attempt to resolve any disagreement with respect
thereto and (ii) if such disagreement is not resolved within thirty (30) days
following commencement of such discussions, Customer shall have the right, no
more than one (1) time per Fiscal Year each for the subject of (1) and (2) below
and on no less than thirty (30) days’ notice to Manufacturer, to appoint a
reputable and internationally recognized independent Third-Party audit firm
reasonably acceptable to Manufacturer (and which agrees to be bound by
Manufacturer’s customary confidentiality agreement) to audit such relevant
Records, during normal business hours and on a confidential basis, to verify
that, either (1) the change in the relevant Products’ Price for an applicable
Facility for the upcoming Fiscal Year, as applicable, or (2) the true-up
determination with respect to (x) the estimated and actual Facility Conversion
Costs of a Facility with respect to any Fiscal Year or (y) the Facility
Estimated Product Materials Cost and the Facility Actual Product Materials Cost
with respect to any Fiscal Year, was accurately and equitably calculated by
Manufacturer in accordance with this Agreement; provided that Customer shall be
deemed to have waived its right for such a review if Customer does not make such
request within thirty (30) days following delivery of Manufacturer’s notice to
Customer of such increase. For the avoidance of doubt, any such audit initiated
by Customer in accordance with clause (ii) above shall include in the scope of
audit all of the Products manufactured at the applicable Facility, and not be
limited in scope to the discrete Product(s) in question. Subject to
Section 3.4(b)(2), Customer shall bear all costs and expenses of conducting such
an audit, and such accounting firm shall work on an hourly or flat fee basis
without a contingency fee or other performance or bonus fee. Such accounting
firm shall, as promptly as practicable, provide in writing (I) a detailed report
of such audit to Manufacturer and (II) a separate report limited to the Price
for the subject Products in the relevant Fiscal Year as calculated by such
accounting firm

 

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  in accordance with this Agreement to Manufacturer and Customer. The Price for
the Products during a Fiscal Year, as calculated by such accounting firm, absent
any manifest error, shall be binding upon the Parties with respect to such
increase or required payment, as applicable; provided that, within fifteen
(15) days of receipt of the audit report, Manufacturer shall have the right to
dispute such Price or calculation thereof by submitting written notice to
Customer and the accounting firm accompanied by information supporting
Manufacturer’s position. Within thirty (30) days of receipt of Manufacturer’s
notice of dispute, the accounting firm shall issue its final findings with
respect to the Price for the relevant Product in the relevant Fiscal Year and
such decision, absent manifest error, shall be binding upon the Parties.

 

  (b)

If, as a result of any audit by Customer pursuant to Section 3.4(a), the
aggregate Price calculated by the accounting firm with respect to all Products
manufactured at the applicable Facility for a Fiscal Year is:

 

  (i)

less than ninety-five percent (95%) of the aggregate Price for all such Products
established by Manufacturer pursuant to Section 3.2 for such Products during
such Fiscal Year, then, if Customer has made payments to Manufacturer for such
Products at the higher Price established by Manufacturer during such Fiscal
Year, Manufacturer shall refund to Customer the overpayment made by Customer; or

 

  (ii)

more than one hundred and five percent (105%) of the aggregate Price for all
such Products established by Manufacturer pursuant to Section 3.2 for such
Products during such Fiscal Year, then, if Customer has made payments to
Manufacturer for such Products at the lower Price established by Manufacturer
for such period, Customer shall promptly pay Manufacturer for the amount of the
underpayment that should have been paid by Customer;

in each case of clauses (i) and (ii), (1) such payment to be made within
forty-five (45) days of the owing Party’s receipt of the relevant detailed
report and final Price pursuant to Section 3.4(a) and (2) Manufacturer shall be
responsible for payment of the applicable accounting firm’s reasonable and
actual fees in connection with such audit.

 

  3.5

Invoices and Payment.

Manufacturer shall submit invoices to Customer upon Delivery of Product. All
invoices for Products will be in functional currency unless otherwise specified
in the applicable Facility Addendum, and all undisputed payments hereunder shall
be in full and be made without any withholding, offset or any other deductions.
Manufacturer shall include the following information on all invoices: (a) the
applicable Purchase Order number and billing address; (b) the quantity of
Product

 

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delivered (and where applicable, the type, description or part number, if any);
(c) the required delivery date specified in the applicable Purchase Order;
(d) the actual date of Delivery; (e) the Price; (f) any applicable Taxes,
transportation charges or other charges provided for in the applicable Purchase
Order; (g) the applicable invoice number; and (h) the Delivery Facility, unless
otherwise specified in the Facility Addendum. Subject to Customer’s rights under
Section 4.8 to reject Non-Complying Product or Product that is not otherwise
Delivered in accordance with the terms of and conditions of this Agreement,
Manufacturer shall invoice Customer for Product upon Delivery of the applicable
Product in accordance with Section 2.6(a). Customer shall be obligated to pay
only for actual quantities of Product delivered. Unless otherwise set forth in
the applicable Facility Addendum with respect to a particular Product or
Products, Customer shall pay all undisputed amounts due in the currency
specified in the applicable Facility Addendum within forty-five (45) calendar
days from the date of the invoice. If Customer disputes all or any portion of an
invoice, it shall be required to pay only the amount not in dispute, and in such
event Customer shall notify Manufacturer of the amount and nature of the
dispute. Payment by Customer of any amount reflected in any invoice shall not
result in a waiver of any of Customer’s rights under this Agreement. If any
payment required to be made under this Agreement is not made within twenty
(20) days of the applicable date when such payment is due (the “Late Payment
Date”), interest shall accrue on such past due amount from the Late Payment Date
until the date payment is actually made at a quarterly rate equal to the lesser
of (i) the Three-Month U.S. dollar LIBOR (Reuters Page LIBOR01) on the Late
Payment Date (or the next Business Day if such Late Payment Date is not a
Business Day), and (ii) the maximum rate permitted by applicable Law. Time for
any payments hereunder shall be of the essence.

 

  3.6

Taxes.

 

  (a)

All sums payable under this Agreement are exclusive of any amount in respect of
VAT. If any action of one Party (the “Supplier”) under this Agreement
constitutes, for VAT purposes, the making of a supply to another Party (or a
member of that Party’s Group) (the “Recipient”) and VAT is or becomes chargeable
on that supply, the Recipient shall pay to the Supplier, in addition to any
amounts otherwise payable under this Agreement by the Recipient, a sum equal to
the amount of the VAT chargeable on that supply against delivery to the
Recipient of a valid VAT invoice issued in accordance with the laws and
regulations of the applicable jurisdiction.

 

  (b)

Without duplication of amounts covered by Section 3.6(a), Customer (or the
applicable Affiliate) shall be responsible for all VAT, sales, goods and
services, use, gross receipts, transfer, consumption and other similar Taxes
(excluding, for clarity, Taxes imposed on net income, profits and gains and
franchise Taxes), together with interest, penalties and additions thereto
(“Service Taxes”), imposed by applicable taxing authorities on the direct sale
of Products to Customer or any of its Affiliates or any payment hereunder;
provided that such Service Taxes are shown on a valid invoice.

 

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  If Manufacturer or any of its Affiliates is required to pay any part of such
Service Taxes, Manufacturer shall provide Customer with evidence that such
Service Taxes have been paid, and Customer (or its applicable Affiliate) shall
reimburse Manufacturer for such Service Taxes. Manufacturer shall, upon the
reasonable request of Customer, promptly revise any invoice to the extent such
invoice was erroneously itemized or categorized. Each Party shall, and shall
cause its Affiliates to, use commercially reasonable efforts to (i) minimize the
amount of any Service Taxes imposed on the provision of Services hereunder,
including by availing itself of any available exemptions from or reductions to
any such Service Taxes, and (ii) cooperate with the other Party in providing any
information or documentation that may be reasonably necessary to minimize such
Service Taxes or obtain such exemptions or reductions. If at any time
Manufacturer (or any of its Affiliates) receives a refund (or credit or offset
in lieu of a refund) of any Service Taxes borne by Customer (or any of its
Affiliates), then Manufacturer or its Affiliate receiving such refund or
utilizing such credit or offset shall promptly pay over the amount of such
refund, credit or offset (net of all reasonable related out-of-pocket costs,
expenses and Taxes incurred in respect thereof) to Customer or its applicable
Affiliate, it being understood that Customer and its applicable Affiliate shall
be liable for (x) any subsequent disallowance of such refund, credit or offset
and any related interest, penalties or additions thereto and (y) any reasonable
out-of-pocket costs and expenses related to such disallowance.

 

  (c)

The Parties and their Affiliates shall reasonably cooperate to determine whether
any Tax withholding applies to any amounts paid under this Agreement and, if so,
shall further reasonably cooperate in (i) minimizing the amount of any such
withholding Taxes, including by availing itself of any available exemptions from
or reductions to any such withholding Taxes, (ii) providing any information or
documentation that may be reasonably necessary to minimize such withholding
Taxes or obtain such exemptions (including, without limitation, pursuant to any
applicable double taxation or similar treaty) or (iii) receiving a refund of
such withholding Taxes or claiming a Tax credit therefor. If any such
withholding is required by applicable Law, the paying Party (or its applicable
Affiliate) shall properly and timely withhold and remit such Taxes to the
applicable taxing authority and use reasonable efforts to provide the other
Party with a copy of any receipt (where it is common practice for the applicable
taxing authority to provide such a receipt) or other documentation confirming
such payment, and such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the receiving Party (or its applicable
Affiliate). The paying Party (or its applicable Affiliate) shall not be required
to “gross up” any amounts invoiced to the paying Party to account for, or
otherwise compensate the receiving Party (or its applicable Affiliate) for, any
Taxes that are required to be withheld under applicable Law.

 

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  (d)

Where a Party or any member of its Group is required by this Agreement to
reimburse or indemnify the other Party or any member of its Group for any cost
or expense, the reimbursing or indemnifying Party (or the applicable member of
its Group) shall reimburse or indemnify the other Party (or the applicable
member of its Group) for the full amount of the cost or expense, inclusive of
any amounts in respect of VAT imposed on that amount to the extent properly
reflected on a valid invoice, except to the extent that the reimbursed or
indemnified Party reasonably determines that it (or such member of its Group),
or a member of the same group as it (or such member of its Group) for VAT
purposes, is entitled to credit for or repayment of that VAT from any relevant
taxing authority.

 

  (e)

For purposes of this Agreement, and except as otherwise specifically provided in
this Agreement, Tax matters shall be exclusively governed by the Tax Matters
Agreement, and in the event of any inconsistency between the Tax Matters
Agreement and this Agreement with respect to Tax matters, the Tax Matters
Agreement shall control.

 

  3.7

No Duplicative Payments. Notwithstanding anything to the contrary in this
Agreement, no Party (or Affiliate thereof) shall enjoy a duplicative right,
entitlement, obligation, or recovery with respect to any matter arising out of
the same facts and circumstances.

 

4.

Manufacturing Standards and Quality Assurance.

 

  4.1

Quality Agreement.

On a Facility-by-Facility and Product-by-Product basis, the Parties will comply
with the requirements and provisions set forth in the Quality Agreement
applicable to the applicable Facility and Product, the form of which has been
attached hereto as Attachment B and, through such attachment, made a part
hereof. In the event of a conflict between the terms of the applicable Quality
Agreement and the terms of this Agreement, the terms of the Quality Agreement
shall govern and control for all quality and regulatory compliance matters and
the terms of this Agreement shall govern and control for all other matters.

 

  4.2

Manufacturing Standards.

Manufacturer shall manufacture and supply each Product (including disposing of
all Waste and other materials) in accordance with all applicable Specifications,
applicable Laws, requirements under the applicable Quality Agreement, and this
Agreement.

 

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  4.3

Manufacturing Changes.

 

  (a)

Discretionary Changes. Subject to Section 4.3(b), in the event that either Party
desires to change, revise, modify or otherwise alter the Specifications,
manufacturing processes, Product Materials, Buy-Sell Materials,
Customer-Supplied Materials, or Facilities with respect to a given Product in
any manner (each, a “Manufacturing Change”), the Party desiring the
Manufacturing Change shall notify the other Party in writing of the proposed
Manufacturing Change and the Parties will promptly meet to discuss, in good
faith, the feasibility of implementing such Manufacturing Change and the
allocation of costs between the Parties for such Manufacturing Change; provided
that the requested Manufacturing Change will not be implemented unless and until
the Parties mutually agree in writing to implement such Manufacturing Change.
Unless otherwise agreed upon by the Parties, the Party requesting the
Manufacturing Change will be responsible for, and will bear the costs of, any
filings or other actions that either Party must take with the applicable
Governmental Authority as a result of such Manufacturing Change.

 

  (b)

Required Changes. If, at any time, a Manufacturing Change is required by a
Governmental Authority in a country in which Regulatory Approval for a given
Product has been granted, a Governmental Authority in a country in which
Customer seeks to obtain Regulatory Approval for a given Product, or a
Governmental Authority in the country in which the Facility that manufactures a
given Product is located, then the Party that first has knowledge of the
required Manufacturing Change shall notify the other Party in writing of such
required Manufacturing Change, and Manufacturer will review such Manufacturing
Change with Customer. Manufacturer will bear all costs and expenses associated
with implementing the Manufacturing Change, unless such Manufacturing Change
relates solely to a Product or Products manufactured for Customer (including any
required labeling changes), in which case Customer will bear all costs and
expenses associated with implementing such Manufacturing Change for such
Product, including any changes to labeling or packaging, but only to the extent
such costs are reasonable and documented.

 

  4.4

Pest Control.

Manufacturer shall manufacture all Products, and Manufacturer shall store all
Product Materials, Buy-Sell Materials, Customer-Supplied Materials, and all
Products, in a clean, dry area, free from insects and rodents, in a manner to
prevent entry of foreign materials and contamination of Product. Manufacturer’s
pest control measures shall include the adequate cleaning of the Facility,
control of food and drink, protection of Product from the environment,
monitoring of flying and crawling pests and logs detailing findings and actions
taken. Manufacturer’s pest control program shall be detailed in a written
procedure which complies with applicable Laws, including cGMPs, and which shall
be subject to review and approval by Customer. If Customer has specific concerns
about procedures in place at any Facility, Customer will present such issues in
its audit findings and the Parties will discuss in good faith a mutually
agreeable plan for resolution of such issues. Failure of Manufacturer to comply
with this Section 4.4 shall be deemed a material breach of this Agreement.

 

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  4.5

Legal and Regulatory Filings and Requests.

 

  (a)

Manufacturer shall reasonably cooperate with Customer in responding to all
requests for information from, and in making all legally required filings with,
Governmental Authorities in the Territory having jurisdiction to make such
requests or require such filings. Manufacturer shall: (a) obtain and comply with
all licenses, consents and permits required under applicable Laws in the
Territory (and Manufacturer shall provide Customer with a copy of all such
licenses, consents and permits that are material upon Customer’s reasonable
request); and (b) comply with all applicable Laws in the Territory with respect
to its manufacturing and packaging processes, the Facility or otherwise, to
permit the performance of its obligations hereunder. Upon Customer’s request,
Manufacturer shall apply for and obtain Certificates of Pharmaceutical
Production (“CPP”) from the Governmental Authorities of the country where the
Facility is located, such CPPs to be issued to countries where CPPs according to
Customer’s opinion are required. Manufacturer shall pay all reasonable costs
necessary to obtain such CPPs and be entitled to be reimbursed against invoice
by Customer at cost; provided that Manufacturer shall make good faith efforts to
consolidate its invoices for such reimbursement for CPPs and submit to Customer
on a Fiscal Year quarterly basis.

 

  (b)

In the event that Customer wishes to extend the Territory with respect to a
certain Product, Customer shall notify Manufacturer of such request and
Manufacturer shall consider Customer’s request in good faith. For the avoidance
of doubt, in the event that the Parties agree to extend the Territory with
respect to a certain Product, any resulting Manufacturing Change shall be
treated as a discretionary Manufacturing Change and governed by Section 4.3(a).

 

  4.6

Quality Tests and Checks.

Manufacturer shall perform all bulk holding stability, manufacturing trials,
validation (including, but not limited to, method, process and equipment
cleaning validation), raw material, in-process, bulk finished product and
stability (chemical and/or microbial) tests or checks required to assure the
quality of a given Product and any tests or checks required by the
Specifications, the Quality Agreement, applicable Facility Addendum or
applicable Laws. With respect to any Product manufactured prior to Closing or
located at a Facility as of Closing, Manufacturer shall maintain, continue and
complete any and all such activities, tests and checks, including, without
limitation, all ongoing stability testing. All costs associated with the
performance of Manufacturer’s obligations under this Section 4.6 (including with
respect to any Product manufactured prior to Closing or located at a Facility as
of Closing) are included in the Price of each Product and, accordingly,
Manufacturer shall perform the foregoing at its cost and expense, without
further reimbursement from Customer. Manufacturer shall obtain Product for these
tests from batches of Product manufactured under this Agreement, and
Manufacturer is

 

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responsible for providing all necessary technical, quality and operational
resources. All tests and test results shall be performed, documented and
summarized by Manufacturer in accordance with the Specifications, Quality
Agreement, applicable Facility Addendum, applicable Laws and reasonable quality
assurance requirements provided by Customer to Manufacturer in writing.
Manufacturer shall maintain all production Records and disposition of each batch
of Product.

 

  4.7

Responsibility for Non-Complying Product.

Manufacturer shall not release any Product for Delivery to Customer that does
not conform to the covenants set forth in Section 5.2(e) (such non-conforming
Product, “Non-Complying Product”), without the prior written approval of
Customer. Manufacturer shall quarantine all such Non-Complying Products and
shall promptly submit to Customer a report detailing the nature of such
non-compliance and Manufacturer’s recommended disposition, including the
investigation and testing done. Manufacturer shall also provide any additional
information regarding such Non-Complying Product as may reasonably be requested
by Customer. Customer shall not be required to pay for any Non-Complying Product
or for the destruction or other disposition thereof (unless an investigation
determines that the root cause for such Product being Non-Complying Product is
Non-Complying Buy-Sell Materials or Non-Complying Customer-Supplied Material).

 

  4.8

Rejection of Non-Complying Product.

 

  (a)

Customer’s Ability to Reject. Customer may reject any Non-Complying Product or
Product that is not delivered to Customer in accordance with this Agreement by
providing written notice of such rejection to Manufacturer within seventy-five
(75) days following Customer’s receipt of any Delivery of Product hereunder;
provided, however, that Customer may, until the expiry date for a Product,
provide notice of rejection of any Delivery of such Product having (i) latent
defects, (ii) any defects that are not reasonably discoverable by Customer
through standard inspection and testing of Products or (iii) defects caused by
the breach by Manufacturer of any of its representations or warranties under
this Agreement (collectively, “Latent Defects”); provided, further, that, and
notwithstanding the foregoing, Customer shall notify Manufacturer within sixty
(60) days after Customer first becomes aware of any such Latent Defect.

 

  (b)

Manufacturer’s Ability to Reject. Manufacturer may reject any Non-Complying
Product by (i) providing Customer with no less than sixty (60) days’ prior
written notice of Manufacturer’s intention to reject such Non-Complying Product
along with the documentation set forth in Section 4.7, (ii) meeting with
Customer at Customer’s request to discuss the basis for the proposed rejection
of the subject Non-Complying Product, and (iii) providing Customer with notice
of rejection in the event that Manufacturer rejects the subject Non-Complying
Product at the end of such sixty (60) day period (or such other time frame as
the parties may agree upon).

 

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  (c)

Manufacturer’s Obligation; Replacement. Manufacturer shall respond to any
rejection, defect notice or any quality-related complaint from Customer pursuant
to Section 4.8(a) in a timely manner or such other time frame as may be
specified in the applicable Quality Agreement. Manufacturer shall conduct an
analysis of the causes of any such complaint, shall report to Customer on any
corrective action taken and shall reasonably consider Customer’s suggestions
related to such corrective action or other quality-related matters. Customer
shall promptly return any Product (or portions thereof) rejected pursuant to
Section 4.8(a) to Manufacturer at Manufacturer’s expense. With respect to any
Non-Complying Product rejected by Customer, in addition to any other rights or
remedies of Customer hereunder, Customer may elect, in its sole discretion, upon
written notice to Manufacturer to either (i) have Manufacturer replace any
Non-Complying Product as soon as practicable at no additional charge to
Customer; provided that (A) the Manufacturer shall replace such Non-Complying
Product within a period of ninety (90) days beginning on the date that the
Manufacturer confirms or a Third-Party laboratory determines that the subject
Product is a Non-Complying Product, and (B) if Manufacturer fails to replace
such Non-Complying Product within such ninety (90) day period, then a Triggering
Event shall be deemed to have occurred and the provisions of Section 2.5 shall
apply; or (ii) be reimbursed for the Price of the Non-Complying Product actually
paid. Manufacturer shall reimburse Customer for the cost of all
Customer-Supplied Materials used to manufacture any Non-Complying Product
(unless such Product is a Non-Complying Product due to any Non-Complying
Customer-Supplied Material, as applicable).

 

  (d)

Independent Testing. If the Parties are unable to agree on whether Product
rejected by Customer is Non-Complying Product, then Manufacturer may hire an
independent Third-Party laboratory, subject to Customer’s prior written approval
of such laboratory, not to be unreasonably withheld, conditioned or delayed, to
perform testing on such rejected Product in accordance with the Specifications,
applicable Laws and the Quality Agreement, which Third Party laboratory shall
promptly provide the results thereof to Customer and Manufacturer. Manufacturer
must engage such Third-Party laboratory within the thirty (30) day period
following Manufacturer’s receipt of Customer’s rejection notice. If Manufacturer
fails to engage such Third-Party laboratory during such thirty (30) day period,
then Manufacturer will be deemed to have waived its right to engage such
Third-Party laboratory. The determination of such tests shall be binding upon
the Parties for all purposes hereunder; provided that, if such tests are unable
to determine whether or not such rejected Product is Non-Complying Product, or
if Manufacturer does not engage such Third-Party laboratory within the thirty
(30) day period, then such Product shall be deemed to be Non-Complying Product.
If such tests determine that the rejected Product is, or such Product is so
deemed to be, Non-Complying Product, then Manufacturer shall bear the costs of
such tests and Customer’s

 

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  remedies with respect to Non-Complying Product as set forth in this Agreement
shall apply to such Non-Complying Product. Otherwise, Customer shall (i) bear
the costs of such tests and shall remain obligated to pay Manufacturer the Price
for such Product in accordance with Section 3 and (ii) reimburse Manufacturer
for any shipping charges paid by Manufacturer pursuant to Section 4.8(c) with
respect to the return of such Product to Manufacturer. Without limiting the
foregoing obligations, if Customer reasonably requests in writing, then
Manufacturer shall use commercially reasonable efforts to re-deliver such
Product to Customer at Customer’s expense. For the avoidance of doubt, provided
that the Product conforms to the minimum shelf-life dating set forth in
Section 5.2(e)(v) upon initial Delivery, such minimum shelf-life dating
requirement shall not apply to the subject Product upon re-delivery in
accordance with the immediately preceding sentence.

 

  (e)

Survival. The provisions of this Section 4.8 shall survive termination or
expiration of this Agreement or the applicable Facility Addendum.

 

  4.9

Disposal of Rejected and Non-Complying Product.

All Non-Complying Product and Product rejected pursuant to this Agreement shall
be removed (if applicable) and disposed of by Manufacturer in accordance with
all applicable Laws, and as approved in advance by Customer in writing (such
disposal cost to be at Manufacturer’s expense, unless it is subsequently
determined that Customer wrongly rejected such Product pursuant to Section 4.8).
Manufacturer shall make documentation relating to such disposition available to
Customer upon Customer’s reasonable request. Manufacturer shall not sell for
salvage or for any other purpose any rejected or Non-Complying Product, without
the prior written approval of Customer. Manufacturer shall destroy all
Non-Complying Product prior to disposal and Manufacturer shall deface and render
unreadable all words or symbols that identify Customer, including Customer’s
trademarks and logotypes that adorn any packaging containing such Product, prior
to disposal of such Product.

 

  4.10

Maintenance and Retention of Records.

Manufacturer shall maintain detailed Records with respect to Product Materials,
Buy-Sell Materials, and Customer-Supplied Materials usage and finished Product
production in accordance with the Quality Agreement.

 

  4.11

Government Inspections, Seizures and Recalls.

 

  (a)

Notification; Initiation of Recalls. If (i) Manufacturer determines or comes to
learn that a Product distributed to the market contains a latent defect or
(ii) the FDA or any other Governmental Authority conducts an inspection at
Manufacturer’s Facility, seizes any Product, Buy-Sell Materials,
Customer-Supplied Materials, or Product Materials, requests a Recall of

 

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  any Product, Buy-Sell Materials, Customer-Supplied Materials, or Product
Materials, or otherwise notifies Manufacturer of any violation or potential
violation of any applicable Law at the Facility, or (iii) Customer notifies
Manufacturer of its intent to initiate a Recall, then, with respect to each
((i)-(iii)), Manufacturer shall promptly notify Customer (as applicable) and
shall take such actions as may be required under the Specifications or Quality
Agreement. As applicable, Manufacturer shall promptly send any reports relating
to such inspections, Recalls, violations or potential violations of applicable
Law to Customer; provided that Manufacturer may reasonably redact any such
reports to protect its confidential and proprietary Information that does not
relate to Products. In the event that any such Governmental Authority requests,
but does not seize, a given Product in connection with any such inspection,
Manufacturer shall, to the extent reasonably practicable and permitted by
applicable Law (1) promptly notify Customer of such request, (2) satisfy such
request only after receiving Customer’s approval, (3) follow any reasonable
procedures instructed by Customer in responding to such request and (4) promptly
send any samples of the applicable Product requested by the Governmental
Authority to Customer. Manufacturer shall give and permit full and unrestricted
access to all or any of its premises at any time to any authorized
representative of any Governmental Authority or any of its agents or advisers
and shall cooperate fully with any such representatives, in each case, relating
to any such inspection. Manufacturer shall not initiate any Recall of Product,
except as provided in the Quality Agreement, without the prior written agreement
by Customer.

 

  (b)

Costs. In the event a Recall results from any breach by Manufacturer of this
Agreement, including Recalls on account of a given Product containing a latent
defect, in addition to any other rights or remedies available to Customer under
this Agreement, Manufacturer shall reimburse Customer for Customer’s costs and
expenses associated with such Recall, including costs of materials supplied by
Customer (including Customer-Supplied Materials), shipping costs, administrative
costs associated with arranging and coordinating the Recall and all actual Third
Party costs associated with the distribution of replacement Product; provided
that Customer shall be solely responsible for all, and shall reimburse
Manufacturer for Manufacturer’s costs and expenses associated with any Recall to
the extent such Recall does not result from a breach by Manufacturer of this
Agreement (e.g., is due to any Non-Complying Customer-Supplied Material or
Non-Complying Buy-Sell Material).

 

  4.12

Inspections.

Subject to the remainder of this Section 4.12, no more than once per calendar
year, upon thirty (30) days’ advance written notice to Manufacturer, Customer
may physically inspect or audit (consistent with Section 15.2) the Facilities
under this Section 4.12; provided that Customer will use good faith efforts to
choose dates of

 

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inspection or audit that do not unreasonably interfere with the operation of
Manufacturer’s business; provided, further, that Customer shall consider in good
faith any alternative dates of inspection or audit proposed by Manufacturer
within five (5) days of Manufacturer’s receipt of such notice (it being
understood that nothing in this Section 4.12 shall require Customer to accept
any such proposed alternative dates of inspection or audit). Notwithstanding the
limits set forth in the foregoing sentence, Customer may more frequently conduct
“for cause” physical inspections or audits of a Facility with five (5) days’
advance written notice to Manufacturer if Customer has reasonable cause to
believe that an inspection or audit of such Facility is warranted because
Manufacturer’s activities with respect to such Facility are in breach of this
Agreement, applicable Laws, the Quality Agreement or the applicable Facility
Addendum. Any such inspection or audit shall include access to relevant Records
(subject to the terms of Section 15.2) and Personnel and being present during,
as applicable, start-up manufacturing operations, validation, cleaning,
sampling, laboratory testing, warehouse receiving and storage, pack out and
shipping. Manufacturer shall provide technical assistance and direction to
Customer and its representatives at the Facility. Subject to the terms and
conditions set forth herein, Customer may conduct, at its own expense, periodic
quality audits, to ensure Manufacturer’s compliance with the terms of this
Agreement. Manufacturer shall cooperate with Customer’s representatives for all
of these purposes, and shall promptly correct any deficiencies noted during the
audits. Any Records or information accessed or otherwise obtained by Customer or
its representatives during any such inspection or audit or any visit at any
Facility shall be deemed Manufacturer’s confidential and proprietary Information
and each representative of Customer will be subject to non-use and other
confidentiality obligations substantially comparable to those set forth herein
for Customer.

 

  4.13

Segregation of Restricted Compounds.

Unless otherwise set forth in a Facility Addendum with respect to a Product,
Manufacturer shall not manufacture a Product using facilities or equipment
shared with the following classes of product without prior consultation and
agreement with Customer: (a) steroids, hormones, or otherwise highly active or
toxic products that carry a likelihood of a serious adverse effect (e.g.,
carcinogenicity; anaphylaxis; reproductive and/or developmental toxicity;
serious target organ toxicity) following a potential product cross-contamination
or carry-over scenario, particularly at low exposure concentrations (i.e., with
reference to an acceptable daily exposure (ADE) value or permitted daily
exposure (PDE) value < 10 µg/day); (b) immunosuppressors where the ADE or PDE
value < 10 µg/day; (c) live or infectious biological agents; (d) live or
attenuated vaccines; (e) biotherapeutics where the ADE or PDE value < 10 µg/day
and sufficient deactivation cannot be demonstrated; (f) products exclusive for
animal use; (g) non-medicinal products; or (h) radiopharmaceuticals.
Manufacturer shall not manufacture any highly sensitizing products, including
beta-lactam antibiotics, as well as certain non-beta-lactam antibiotics, or
otherwise highly sensitizing products that can elicit an immediate
hypersensitivity reaction (Type I hypersensitivity; immunoglobulin E-mediated)
in the same Facility as a Product.

 

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  4.14

Packaging Material.

Unless otherwise provided in the applicable Facility Addendum, Customer shall
determine and be responsible for the text (including any logos or other
graphics) for all packaging material used in connection with Product.
Manufacturer shall assure that all packaging materials are accurate and
consistent with Customer’s specifications for such text or graphics, including
such matters as placement, size and colors. Manufacturer shall promptly notify
Customer of any errors or deficiencies in such provided packaging materials.

 

5.

Covenants.

 

  5.1

Mutual Covenants. Each Party hereby covenants to the other Party that it will
perform its activities under this Agreement in full compliance with all
applicable Global Trade Control Laws, including as follows:

 

  (a)

unless a license or other authorization is first obtained, the issuance of which
is not guaranteed, neither Party will knowingly transfer to the other Party any
goods, software, technology or services that are (1) controlled at a level other
than EAR99 under the U.S. Export Administration Regulations; (2) controlled
under the U.S. International Traffic in Arms Regulations; (3) specifically
identified as an E.U. Dual Use Item; or (4) on an applicable export control list
of a foreign country;

 

  (b)

prior to engaging in any activities in a Restricted Market, involving
individuals ordinarily resident in a Restricted Market or including companies,
organizations, or Governmental Authorities from or located in a Restricted
Market in each case in connection with this Agreement, each Party must first
notify the other Party (which notice, notwithstanding Section 18, shall be
addressed to (a) Pluto at gtc@pfizer.com and (b) Spinco at an email address
designated by Spinco to Pluto), who will review and, if compliant with Global
Trade Control Laws, approve (subject to any appropriate conditions) such
activities (such approval not to be unreasonably withheld or delayed), within
five (5) Business Days of such notification; provided that (1) to the extent
relating to U.S. sanctions or export controls, such notification and approval
shall not be required if the activity contemplated would be permissible for U.S.
persons subject to U.S. sanctions (including without limitation under a U.S.
Department of the Treasury Office of Foreign Assets Control general license),
and (2) once notification is made and approval is granted with respect to a
specific counterparty in a Restricted Market, further notification and approval
will not be required for future transactions or activities with the same
counterparty (unless there is a change in circumstances, processes or
intermediate parties, including, but not limited to, carriers, or otherwise a
change to Global Trade Control Laws relevant to that Restricted Market or
counterparty); provided that, notwithstanding the foregoing, neither Party shall
undertake any of the activities described in this clause (2) without the prior
written approval of the other Party; and

 

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  (c)

notwithstanding anything set forth in Section 4.14 to the contrary, for the
purposes of any and all packaging and shipping of any goods, software,
technology or services pursuant to the activities contemplated under this
Agreement, Manufacturer will determine:

 

  (i)

a classification under relevant import and export laws;

 

  (ii)

the country of origin; and

 

  (iii)

a value for customs;

provided, however, that the Party acting as the importer of record (IOR) or
exporter of record (EOR) shall have the right to request a review of any
determination contemplated by clause (i), (ii) or (iii) above; provided,
further, that if the IOR or EOR (as applicable) disagrees with such
determination, then such Party shall maintain the right to refuse to export or
import the applicable goods, software, technology or services.

 

  5.2

Manufacturer Covenants. Manufacturer hereby covenants to Customer that:

 

  (a)

The Facility and all equipment, tooling and molds utilized in the manufacture
and supply of Product hereunder by or on behalf of Manufacturer shall, during
the Term of this Agreement, be maintained in good operating condition and shall
be maintained and operated in accordance with all applicable Laws. The
manufacturing and storage operations, procedures and processes utilized in
manufacture and supply of Product hereunder (including the Facility) shall be in
full compliance with all applicable Laws, including cGMP and health and safety
laws.

 

  (b)

Manufacturer shall perform all of its obligations under this Agreement in
compliance with the applicable Laws in the Territory. Manufacturer is in
compliance and shall continue to comply, and shall cause its Personnel to
comply, with all applicable Laws, including Laws requiring Serialization;
provided that, with respect to compliance with Laws requiring Serialization,
Customer shall reimburse Manufacturer for all investments made or costs incurred
by Manufacturer in connection with any Serialization requirements specific to a
given Product or Products (which, for clarity, shall not include Serialization
requirements applicable to both Products and other products produced by
Manufacturer in the Facility), but only to the extent such costs are reasonable
and documented and are directed specifically with respect to a Product or
Products. Manufacturer has and shall continue to have, and shall cause its
Personnel to have, all professional licenses, consents, authorizations, permits,
and certificates, and shall have and shall cause its Personnel to have completed
all registrations and made such notifications as required by applicable Law for
its performance of the services under this Agreement.

 

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  (c)

Manufacturer shall hold during the Term of this Agreement all licenses, permits
and similar authorizations required by any Governmental Authority in the
Territory for Manufacturer to perform its obligations under this Agreement.

 

  (d)

Manufacturer shall have good title to all Product supplied to Customer pursuant
to this Agreement and shall pass such title to Customer (or its designee) free
and clear of any security interests, liens, or other encumbrances.

 

  (e)

Products furnished by Manufacturer to Customer under this Agreement:

 

  (i)

shall be manufactured, packaged, labeled, handled, stored and Delivered in
accordance with, shall be of the quality specified in, and shall conform upon
Delivery to Customer (or its designee) to, the Specifications;

 

  (ii)

shall be manufactured, packaged, labeled, handled, stored and Delivered in
compliance with all applicable Laws including, without limitation, cGMPs, and in
accordance with the Quality Agreement, this Agreement and the applicable
Facility Addendum;

 

  (iii)

shall not contain any Product Material that has not been used, handled or stored
by or on behalf of Manufacturer in accordance with the Specifications, all
applicable Laws, the Quality Agreement, this Agreement and the applicable
Facility Addendum;

 

  (iv)

shall not be adulterated or misbranded within the meaning of Sections 501 and
502, respectively, of the Act or any other applicable Law; and

 

  (v)

shall, at the time Delivered, have at least a remaining shelf-life as specified
in the applicable Facility Addendum.

Notwithstanding the foregoing clauses (i) through (v) of this Section 5.2(e) or
anything else contained in this Agreement or any Facility Addendum or Quality
Agreement, Manufacturer shall have no liability under this Agreement (including
under Section 4.11(b) or Section 10.1) or any Facility Addendum or Quality
Agreement for any Non-Complying Product which is non-complying due to any
Non-Complying Customer-Supplied Materials or Non-Complying Buy-Sell Materials.

 

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  (f)

Manufacturer has not and will not directly or indirectly offer or pay, or
authorize such offer or payment, of any money or anything of value or improperly
or corruptly seek to influence any Government Official or any other Person in
order to gain an improper business advantage, and, has not accepted, and will
not accept in the future, such a payment. Manufacturer will comply with the
Anti-Bribery and Anti-Corruption Principles set forth in Attachment D.

 

  (g)

Manufacturer shall ensure that it and its Personnel comply with the standard
policies, regulations and directives listed on Attachment E and incorporated
herein.

 

  5.3

Manufacturer’s Social Responsibility.

 

  (a)

Manufacturer covenants that it shall not, during the Term of this Agreement
(i) use involuntary or underage labor (defined in accordance with applicable
Laws) at the Facilities where its performance under this Agreement will occur or
(ii) maintain unsafe or unhealthy conditions in any dormitories or lodging that
it provides for its employees. Manufacturer agrees that during the Term of this
Agreement, it shall promptly correct unsafe or unhealthy conditions in any
dormitories or lodging that it provides for its employees.

 

  (b)

Manufacturer covenants that it will perform its obligations under this Agreement
in a manner consistent with all of the Pharmaceutical Industry Principles for
Responsible Supply Chain Management, as codified as of the Effective Date at
http://www.pharmaceuticalsupplychain.org.

 

  (c)

Manufacturer shall not use, and shall not allow to be used, any (i) cassiterite,
columbite-tantalite, gold, wolframite, or the derivatives tantalum, tin or
tungsten that originated in the Democratic Republic of Congo or an adjoining
country or (ii) any other mineral or its derivatives determined by the Secretary
of State to be financing conflict pursuant to Section 13(p) of the Securities
Exchange Act of 1934 ((i)-(ii) collectively, “Conflict Minerals”), in the
production of any Product. Notwithstanding the foregoing, if Manufacturer uses,
or determines that it has used, a Conflict Mineral in the production of any
Product, Manufacturer shall immediately notify Customer, which notice shall
contain a written description of the use of the Conflict Mineral, including,
without limitation, whether the Conflict Mineral appears in any amount in the
applicable Product (including trace amounts) and a valid and verifiable
certificate of origin of the Conflict Mineral used. Manufacturer must be able to
demonstrate that it undertook a reasonable country of origin inquiry and due
diligence process in connection with its preparation and delivery of the
certificate of origin.

 

  (d)

Manufacturer will provide Customer with periodic access, upon reasonable notice,
to any of its Facilities where it is performing under this Agreement, to its
employees and Records and to any associated dormitories or lodging that
Manufacturer provides to its employees, to permit Customer to determine
Manufacturer’s compliance with this Section 5.3. Customer may exercise its
inspection rights under this Section 5.3(d) upon receipt of any information that
would suggest to a reasonable Person that Manufacturer is not fulfilling its
obligations under this Section 5.3.

 

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  5.4

Notice of Material Events.

Manufacturer will promptly notify Customer of any actual or anticipated events
of which Manufacturer is aware that have or would be reasonably expected to have
a material effect on any Product or on its ability to manufacture or supply any
Product in accordance with the provisions set forth herein, including any labor
difficulties, strikes, shortages in materials, plant closings, interruptions in
activity and the like.

 

  5.5

Disclaimer of Warranties.

EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES NOR RECEIVES
ANY WARRANTY OF ANY KIND, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING
WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE,
TITLE AND NON-INFRINGEMENT OF ANY FIRMWARE, SOFTWARE OR HARDWARE PROVIDED OR
USED HEREUNDER, AND ANY REPRESENTATIONS OR WARRANTIES ARISING FROM COURSE OF
DEALING, COURSE OF PERFORMANCE OR TRADE USAGE, AND ALL SUCH REPRESENTATIONS AND
WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.

 

6.

Environmental Covenants.

 

  6.1

Compliance with Environmental Laws.

 

  (a)

Manufacturer shall perform all of its obligations herein in compliance with all
Environmental Laws and all licenses, registrations, notifications, certificates,
approvals, authorizations or permits required under Environmental Laws.

 

  (b)

Manufacturer shall be solely responsible for all Environmental Liabilities
arising from its performance of this Agreement.

 

  6.2

Permits, Licenses and Authorization.

 

  (a)

Manufacturer shall be solely responsible for obtaining, and shall obtain in a
timely manner, and maintain in good standing, all licenses, registrations,
notifications, certificates, approvals, authorizations or permits required under
Environmental Laws, whether de novo documents or modifications to existing
documents, which are necessary to perform the services hereunder, and shall bear
all costs and expenses associated therewith.

 

  (b)

Manufacturer shall provide copies of all material items referenced in
Section 6.2(a) to Customer upon request by Customer and shall operate in
compliance therewith.

 

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  (c)

Manufacturer shall provide Customer with reasonably prompt verbal notice,
confirmed in writing within twenty-four (24) hours, in the event of any major
incident, which shall include any event, occurrence, or circumstance, including
any governmental or private action, which materially impacts or could materially
impact Manufacturer’s ability to fulfill its obligations under this Agreement.
These include, but are not limited to: (i) material revocation or modification
of any of the documents described in Section 6.2(a), (ii) any action by
Governmental Authorities that may reasonably lead to the material revocation or
modification of Manufacturer’s required permits, licenses, or authorizations, as
listed above, (iii) any Third Party Claim against the management or ownership of
the Facility that could reasonably materially impact Manufacturer’s obligations
under this Agreement, (iv) any fire, explosion, significant accident, or
catastrophic Release of Hazardous Materials, or significant “near miss”
incident, (v) any significant non-compliance with Environmental Laws and
(vi) any environmental condition or operating practice that may reasonably be
believed to present a significant threat to human health, safety or the
environment.

 

  (d)

Notwithstanding the requirements noted above, each Party, whether Customer or
Manufacturer, is required to create and maintain:

 

  (i)

required licenses, permits and agreements, including those necessary to affect
imports, exports, and activities covered by economic sanctions regulations,
including annual agreements for activities involving Restricted Markets;

 

  (ii)

policies, procedures, controls, and systems to support compliance with Global
Trade Control Laws; and

 

  (iii)

agreements with Customs Brokers, freight forwarders, financial institutions, and
other third parties, as necessary.

 

  6.3

Generation of Hazardous Wastes.

Without limiting other legally applicable requirements, Manufacturer shall
prepare, execute and maintain, as the generator of Waste, all registrations,
notices, shipping documents and manifests required under applicable
Environmental Laws and in accordance therewith. Manufacturer shall utilize only
reputable and lawful Waste transportation and disposal vendors, and shall not
knowingly utilize any such vendor whose operations endanger human health or the
environment.

 

  6.4

Environmental Sustainability Information.

Manufacturer will disclose to Customer, on an annual basis, its results with
respect to any efforts to reduce greenhouse gas emissions, water consumption or
the generation of waste associated with the performance of this Agreement, to
the extent Manufacturer otherwise prepares such results.

 

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  6.5

Environmental and Health and Safety Reviews.

 

  (a)

Manufacturer covenants that it will, to the Manufacturer’s knowledge, completely
and accurately disclose to Customer all material environmental and health and
safety information regarding its Products (including an obligation to supplement
this information, as necessary) during the Term of this Agreement, as reasonably
requested by Customer.

 

  (b)

Manufacturer shall permit Customer (at Customer’s expense) to conduct reasonable
annual reviews of the environmental and health and safety practices and
performance of the Facilities with respect to the Products where Manufacturer’s
performance under this Agreement is occurring; provided that such review shall
not include any invasive sampling at such Facilities and shall not unreasonably
interfere with Manufacturer’s operation of such Facilities. In connection with
such reviews, Manufacturer shall reasonably assist in the completion of an
environmental health and safety survey of Manufacturer or the scheduling of an
environmental health and safety audit of the Facility, as applicable, in each
case with respect to the Products. Customer shall share its findings (including
any deficiencies) with Manufacturer as soon as practicable, Manufacturer shall
have the sole right to report any such deficiencies to third parties and
Manufacturer shall use commercially reasonable efforts to correct, at no expense
to Customer, such deficiencies in its environmental and health and safety
management practices with respect to the Products that are not in compliance
with applicable Law or create significant risk to human health or the
environment. Manufacturer acknowledges that such reviews conducted by Customer
are for the benefit of Customer only; they are not a substitute for
Manufacturer’s own environmental and health and safety management obligations
under this Agreement and accordingly, Manufacturer may not rely upon them.

 

7.

Term; Termination.

 

  7.1

Term of Agreement.

Unless otherwise provided in the applicable Facility Addendum, this Agreement
(a) shall commence on the Effective Date and shall continue for a period of four
(4) years from such date (the “Initial Term” of this Agreement), unless sooner
terminated pursuant to Section 7.3, 7.4, 7.5, 7.6 or 7.7, and (b) may be
extended for up to three (3) additional periods of twelve (12) months (each, an
“Extension Period”) by written notice given by Customer to Manufacturer not less
than twelve (12) months prior to the expiration of the Initial Term or the
applicable Extension Period, as the case may be. The Initial Term and all
Extension Periods shall be referred to collectively as the “Term” of this
Agreement. For the avoidance of doubt, the Term of this Agreement shall continue
until all Facility Addenda hereunder expire or otherwise terminate, unless this
Agreement or such Facility Addenda are sooner terminated pursuant to
Section 7.3, 7.4, 7.5, 7.6 or 7.7.

 

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  7.2

Term of Facility Addendum.

Unless otherwise provided in the applicable Facility Addendum, each Facility
Addendum shall commence on the Effective Date and shall continue for a period of
four (4) years from such date (the “Initial Term” of the Facility Addendum),
unless extended or terminated pursuant to Section 7.3, 7.4, 7.5, 7.6 or 7.7. A
Facility Addendum may be extended for up to three (3) additional periods of
twelve (12) months (each, an “Extension Period”) by written notice given by
Customer to Manufacturer not less than twelve (12) months prior to the
expiration of the Initial Term or the applicable Extension Period, as the case
may be. The Initial Term and all Extension Periods shall be referred to
collectively as the “Term” of the Facility Addendum.

 

  7.3

Termination for Cause.

 

  (a)

Either Party may terminate this Agreement and the applicable Facility Addendum,
on a Product-by-Product basis, with respect to a particular Product, upon
written notice to the other Party in the event of a material breach by the other
Party of any term of this Agreement or Facility Addendum with respect to such
Product, which breach remains uncured for ninety (90) calendar days following
written notice to such breaching Party of such material breach.

 

  (b)

Either Party may terminate this Agreement and the applicable Facility Addendum,
on a Facility Addendum-by-Facility Addendum basis, with respect to a particular
Facility, upon written notice to the other Party in the event of a material
breach by the other Party of any term of this Agreement or Facility Addendum
with respect to such Facility, which breach remains uncured for ninety
(90) calendar days following written notice to such breaching Party of such
material breach.

 

  (c)

For clarity, in the event that multiple Products are manufactured by or on
behalf of Manufacturer under this Agreement in the same Facility, a material
breach by Manufacturer of this Agreement or Facility Addendum that is an act or
omission specific to one or more Products in a Facility, but not all Products in
such Facility, shall give rise to an ability of Customer to terminate this
Agreement solely with respect to the affected Product(s) under Section 7.3(a)
but shall not give rise to an ability of Customer to terminate the relevant
Facility Addendum under Section 7.3(b).

 

  7.4

Termination for Disposition of Facility.

In the event that Manufacturer or any of its Affiliates, directly or indirectly,
sells, assigns, leases, conveys, transfers or otherwise disposes of any Facility
(a “Facility Disposition”), then Manufacturer shall immediately notify Customer
of such event and Customer shall be entitled for a period of six (6) months
after the receipt of such notice to terminate any Facility Addendum with respect
to such Facility for

 

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cause immediately upon written notice to Manufacturer and, in the event Customer
decides not to terminate the Facility Addendum for cause, Customer shall be
entitled for a period of two (2) years (or such longer period in order to obtain
approval for manufacture from all applicable Governmental Authorities) after
receipt of such notice to receive Technical Support at Manufacturer’s sole cost
to enable Customer to orderly transfer production of affected Product or
Products to a Customer facility or an alternative facility as designated by
Customer; provided that Manufacturer shall notify Customer of any proposed or
planned Facility Disposition by Manufacturer or any of its Affiliates as soon as
reasonably practicable and in any event no later than the date that is three
(3) months prior to the effective date of such Facility Disposition.

 

  7.5

Termination in Event of Insolvency.

In the event that a Party hereto (a) becomes insolvent, or institutes or has
instituted against it a petition for bankruptcy or is adjudicated bankrupt,
(b) executes a bill of sale, deed of trust, or a general assignment for the
benefit of creditors, (c) is dissolved or liquidated or (d) has a receiver
appointed for the benefit of its creditors, or has a receiver appointed on
account of insolvency (in the case of clauses (a)–(d), such Party shall be
referred to as the “Insolvent Party”), then the Insolvent Party shall
immediately notify the other Party of such event and such other Party shall be
entitled to (i) terminate this Agreement or any and all Facility Addenda for
cause immediately upon written notice to the Insolvent Party or (ii) request
that the Insolvent Party or its successor provide adequate assurances of
continued and future performance in form and substance acceptable to such other
Party, which shall be provided by the Insolvent Party within ten (10) calendar
days of such request, and the other Party may terminate this Agreement and any
or all Facility Addenda for cause immediately upon written notice to the
Insolvent Party in the event that the Insolvent Party fails to provide such
assurances acceptable to the other Party within such ten (10) day period.

 

  7.6

Termination for Breach of Anti-Bribery Representation.

Customer may terminate this Agreement and any and all Facility Addenda effective
immediately upon notice to Manufacturer, if Manufacturer (a) breaches any of the
representations and warranties set forth in Section 5.2(f) or (b) Customer
learns (i) that improper payments are being or have been made or offered to any
Government Official or any other Person by Manufacturer or those acting on
behalf of Manufacturer with respect to any obligations performed hereunder or
(ii) that Manufacturer or those acting on behalf of Manufacturer with respect to
the performance of any obligations hereunder has accepted any payment, item, or
benefit, regardless of value, as an improper inducement to award, obtain or
retain business or otherwise gain or grant an improper business advantage from
or to any other Person or entity. Further, in the event of such termination,
Manufacturer shall not be entitled to any further payment, regardless of any
activities undertaken or agreements with additional Third Parties entered into
by Manufacturer prior to such termination, and Manufacturer shall be liable for
damages or remedies as provided by this Agreement, at Law or in equity.

 

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  7.7

Termination for Convenience by Customer.

 

  (a)

This Agreement and/or any or all Facility Addendum (unless otherwise specified
in the applicable Facility Addendum) may be terminated on a Product-by-Product
basis by Customer immediately upon written notice to Manufacturer, if Customer
cannot continue to distribute, use, market or sell such Product supplied under
this Agreement or the relevant Facility Addendum without violating any
then-current Laws.

 

  (b)

This Agreement and/or any or all Facility Addenda shall be deemed to be
terminated by Customer on a Product-by-Product basis without any further action
of either Customer or Manufacturer in the event that Customer fails to order a
Product during any rolling eighteen (18) month period; provided that this
subsection (b) shall not apply with respect to API as Product.

 

  7.8

Effect of Termination or Expiration.

 

  (a)

The termination or expiration of this Agreement (whether in its entirety or with
respect to any Product or Facility) or any Facility Addendum for any reason
shall not release any Party hereto of any liability which at the time of
termination or expiration had already accrued to the other Party in respect to
any act or omission prior thereto.

 

  (b)

Upon termination of this Agreement by Customer in whole or in part or upon the
termination of any Facility Addendum, in each case, pursuant to Section 7.3,
7.4, 7.5 or 7.6, and on a terminated-Product-by-terminated-Product basis, at
Customer’s option and pursuant to Customer’s instructions, Manufacturer shall
provide Customer with sufficient inventory of such terminated Product to ensure
business continuity according to then-current terms and pricing (subject to
Section 3) until the earlier of: (i) Customer’s identification of, and securing
of Regulatory Approval for, another supplier of such terminated Product or
(ii) unless otherwise set forth in the applicable Facility Addendum as the
“Inventory Tail Period” for such Product, a time period that reflects Customer’s
reasonable needs of such Product as mutually agreed upon by the Parties in good
faith. Manufacturer shall take such further action, at Manufacturer’s expense,
that Customer may reasonably request to minimize delay and expense arising from
termination or expiration of this Agreement. For the avoidance of doubt,
Manufacturer’s obligation to supply Product pursuant to this Section 7.8(b)
shall be subject to and governed by the terms of this Agreement, including terms
pertaining to Forecasts and Purchase Orders and payment terms.

 

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  (c)

Upon Customer’s request at any time during the Term, Manufacturer shall promptly
notify Customer of any material contracts, licenses, permits, and other material
documents, in each case, that are specific to, and are used solely in connection
with, a Product or Facility Addendum and provide copies or access thereto
subject to any restrictions on the provision of copies or access. Upon
termination or expiration of this Agreement in whole or in part or any Facility
Addendum, if requested by Customer within ninety (90) days immediately following
the effective date of such expiration or termination of this Agreement and
pursuant to Customer’s reasonable request and instructions, Manufacturer shall
use commercially reasonable efforts to, as applicable, make assignments or
partial assignments of such material contracts, licenses, permits, and other
material documents, as applicable, in each case subject to any restrictions on
assignment, or as may otherwise be set forth in any Contract relating thereto.
Customer shall reimburse Manufacturer for all out-of-pocket costs reasonably
incurred by Manufacturer in activities conducted pursuant to this
Section 7.8(c), unless this Agreement has been terminated by Customer pursuant
to Section 7.3, 7.4, 7.5 or 7.6, in which case Manufacturer shall bear all such
reasonable expenses.

 

  (d)

The termination or expiration of this Agreement shall not affect the survival
and continuing validity of Section 2.10 (Transitional Support) (with respect to
Manufacturer’s obligations and to the extent Technical Support has been
requested prior to, or within ninety (90) days following, the effective date of
termination or expiration), Section 3.5 (Invoices and Payment), Sections 4.1,
4.5, 4.6, 4.8, 4.10, 4.11, 4.12 and 4.13 (Manufacturing Standards and Quality
Assurance), Section 5 (Covenants), Section 6 (Environmental Covenants),
Section 7.8 (Effect of Termination or Expiration), Section 7.9 (Unused
Materials), Section 7.10 (Return of Materials, Tools and Equipment), Section 8
(Intellectual Property), Section 10 (Indemnification; Limitations of Liability),
Section 11 (Insurance), Section 13 (Confidentiality), Section 15 (Records and
Audits), Section 17 (Notices), Section 18 (Miscellaneous), or of any other
provision which is expressly intended to continue in force after such
termination or expiration.

 

  7.9

Unused Materials.

In the event of the expiration of this Agreement or termination of this
Agreement in whole or in part (including the termination of any Facility
Addendum) by Customer in accordance with Section 7.3, 7.4, 7.5 or 7.6, Customer
may, at its option within ninety (90) days immediately following the effective
date of the expiration or termination of this Agreement, purchase any work in
process and/or Product Materials that Manufacturer has purchased exclusively for
Customer in accordance with this Agreement for the production of any terminated
Product. Customer shall pay Manufacturer’s direct cost for works in process, and
Manufacturer’s purchase price from its suppliers for Product Materials. In the
event of the termination of this Agreement by Customer in accordance with
Section 7.7 or the termination of this Agreement by Manufacturer in accordance
with Section 7.3, 7.4, 7.5 or 7.6, Customer shall purchase at cost all Product
Materials purchased

 

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in accordance with Customer’s Purchase Orders and on reasonable reliance upon
Customer’s Forecast; provided that Manufacturer uses its reasonable commercial
efforts to exhaust existing stocks of such Product Materials prior to the date
of termination. In the event of the termination or expiration of this Agreement
for any other reason, Customer shall have no obligation to purchase any Product
Materials. Any Product Materials that are not purchased or required to be
purchased by Customer pursuant to this Section 7.9 shall be disposed of or
destroyed in accordance with Customer’s instructions, which costs shall be borne
by Manufacturer.

 

  7.10

Return of Materials, Tools and Equipment.

 

  (a)

Upon termination or expiration of this Agreement in whole or in part or, with
respect to any Product, Facility or any Facility Addendum for any reason
whatsoever, at Customer’s request, Manufacturer shall, as promptly as
practicable given relevant circumstances, deliver to Customer in accordance with
Customer’s reasonable instructions all Specifications (and copies thereof),
artwork, labels, bottles, all premiums and packaging materials purchased by
Customer and all Product Materials, Buy-Sell Materials, Customer-Supplied
Materials, and equipment, molds, tablet press tooling or proprietary materials
in Manufacturer’s possession and control that during the Term had, pursuant to
this Agreement or a Facility Addendum, either (i) been provided by Customer to
Manufacturer, or (ii) purchased by Manufacturer (and reimbursed by Customer), in
each case, that are used and held for use exclusively for the manufacture for
Customer of Product or Products impacted by such termination or expiration;
provided that Manufacturer shall not be so required to deliver any materials,
tools or equipment that are fixtures or fittings or any items the removal of
which from the Facility using good faith diligent efforts would be reasonably
likely to disrupt in any material respect, or cause damage to, the Facility or
its operations or any materials, tools or equipment owned, leased or otherwise
controlled by Manufacturer or any of its Affiliates or any material expense. At
Customer’s request, Manufacturer shall, as promptly as reasonably practicable
given relevant circumstances and in accordance with Customer’s reasonable
instructions, remove all such equipment, molds and tablet press tooling from the
Facility and make such equipment, molds and tooling available for pickup at the
Facility by a carrier designated by Customer. All delivery, removal and
transportation costs reasonably incurred in connection with this Section 7.10(a)
shall be borne by Customer, except in the event Customer terminates this
Agreement pursuant to Section 7.3, 7.4, 7.5 or 7.6, in which case all such
reasonable costs shall be borne by Manufacturer.

 

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  (b)

Any Product quarantined at the time of expiration or termination of this
Agreement shall be disposed of or destroyed by Manufacturer in accordance with
Customer’s instructions and at Customer’s cost; provided that, to the extent
(i) such quarantine is the result of Manufacturer’s gross negligence, fraud,
willful misconduct or breach of this Agreement or (ii) this Agreement is
terminated in whole or in part with respect to such Product (including the
termination of the applicable Facility Addendum) by Customer in accordance with
Section 7.3, 7.4, 7.5 or 7.6, then Manufacturer shall be responsible for all
costs incurred by Manufacturer in connection with disposing and destroying such
quarantined Product.

 

8.

Intellectual Property.

 

  8.1

Customer’s Intellectual Property.

Customer hereby grants to Manufacturer a non-exclusive license during the Term
to use any Customer Property and Customer-Owned Improvements and Developments
solely in connection with Manufacturer performing its obligations under this
Agreement or the Facility Addendum in accordance with the terms hereof or
thereof, as applicable. Manufacturer shall not acquire any other right, title or
interest in or to the Customer Property or Customer-Owned Improvements and
Developments as a result of its performance hereunder, and any and all goodwill
arising from Manufacturer’s use of any Customer Property or Customer-Owned
Improvements and Developments shall inure to the sole and exclusive benefit of
Customer.

 

  8.2

Improvements and Developments.

 

  (a)

Each Party acknowledges and agrees that improvements or modifications to
Customer Property may be made by or on behalf of Manufacturer (“Improvements”),
and creative ideas, proprietary information, developments, or inventions may be
developed under or in connection with this Agreement by or on behalf of
Manufacturer (“Developments”), in each case either alone or in concert with
Customer or Third Parties.

 

  (b)

Manufacturer acknowledges and agrees that, as between the Parties, any
Improvements or Developments that are specific to and otherwise solely relate
to, the manufacturing, processing or packaging of Products (such Improvements
and Developments, collectively, “Customer-Owned Improvements and Developments”)
shall be the exclusive property of Customer, and Customer shall own all rights,
title and interest in and to such Customer-Owned Improvements and Developments.
Manufacturer agrees to and hereby does irrevocably transfer, assign and convey,
and shall cause its Personnel to irrevocably transfer, assign and convey, all
rights, title and interest in and to each of the Customer-Owned Improvements and
Developments to Customer free and clear of any encumbrances, and Manufacturer
agrees to execute, and shall cause its subcontractors and Personnel to execute,
all documents necessary to do so. All such assignments shall include existing or
prospective Intellectual Property rights therein in any country.

 

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  (c)

Customer acknowledges and agrees that, as between the Parties, all Improvements
and Developments made by or on behalf of Manufacturer in the conduct of
activities under this Agreement or a Facility Addendum other than Customer-Owned
Improvements and Developments (such Improvements and Developments, collectively,
“Manufacturer-Owned Improvements and Developments”) shall be the exclusive
property of Manufacturer, and Manufacturer shall own all rights, title and
interest in and to such Manufacturer-Owned Improvements and Developments.
Customer agrees to and hereby does irrevocably transfer, assign and convey, and
shall cause its Personnel to irrevocably transfer, assign and convey, all
rights, title and interest in and to each of the Manufacturer-Owned Improvements
and Developments to Manufacturer free and clear of any encumbrances, and
Customer agrees to execute, and shall cause its Personnel and subcontractors to
execute, all documents necessary to do so. All such assignments shall include
existing or prospective Intellectual Property rights therein in any country.

 

  8.3

Ownership of Other Property.

Unless otherwise agreed by the Parties or specified in the Separation Agreement,
Customer is the sole owner of any and all tools, specifications, blueprints and
designs directly owned and supplied or paid for by Customer (i.e., not any
materials that are included in the Price of Product), and Manufacturer shall not
use, transfer, loan or publicize any of the above, except as necessary for its
performance under this Agreement.

 

  8.4

Limited Right to Use.

Subject to the provisions of Section 8.1, nothing set forth in this Agreement
shall be construed to grant to Manufacturer any title, right or interest in or
to any Intellectual Property controlled by Customer or any of its Affiliates.
Use by Manufacturer of any such Intellectual Property shall be limited
exclusively to its performance of this Agreement.

 

9.

Joint Advisory Committee.

 

  9.1

Formation and Role.

The Parties shall, as soon as practicable but not later than within ninety
(90) days after the Effective Date, form a joint advisory committee (the “Joint
Advisory Committee” or “JAC”). The JAC will provide a forum for the good faith
discussion of major matters related to this Agreement, including in particular
(but not limited to) matters of commercial performance, supply, overall
performance, capital investment and business planning (strategy and management),
and the transition to Customer-Supplied Materials arrangements contemplated by
Section 12.1(f), but also any other items, matters or activities, including with
respect to any Facility.

 

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  9.2

Membership; Chairs.

 

  (a)

Membership. The JAC shall consist of up to five (5) representatives appointed by
each Party in writing, or such other number of representatives as the Parties
may agree in writing from time to time (each, a “JAC Member”). Either Party may
invite any person that is not a JAC Member (including consultants and advisors
of a Party) to participate in meetings of the JAC, without a right to
participate in the discussions of the JAC, so long as (i) such person is under
an appropriate obligation of confidentiality, (ii) the inviting Party provided
at least three (3) Business Days’ prior notice to the other Party identifying
such person and (iii) the non-inviting Party does not reasonably object to such
person participating in the discussions of the JAC prior to such meeting.

 

  (b)

JAC Chairs. The JAC shall be co-chaired by one JAC Member of each Party (each, a
“JAC Chair”), to be elected by the respective Party when naming its JAC
Members. The JAC Chairs shall cooperate in good faith to: (i) notify the JAC
Members of each Party of each JAC Meeting, which notice shall be provided at
least thirty (30) calendar days in advance of such meeting (to the extent
practicable) with respect to the ordinary quarterly JAC Meetings; (ii) collect
and organize agenda items for each JAC Meeting, and circulate such agenda to all
JAC Members at least two (2) Business Days prior to each meeting date; provided,
however, that any JAC Member shall be free to propose additional topics to be
included on such agenda, either prior to or in the course of any JAC Meeting;
(iii) preside at JAC Meetings; and (iv) prepare the written minutes of each JAC
Meeting and circulate such minutes for review and approval by the JAC Members of
each Party, and identify action items to be carried out.

 

  9.3

Meetings.

 

  (a)

Ordinary JAC Meetings. During the Term of this Agreement, the JAC shall meet on
a quarterly basis or as otherwise determined in writing by the Parties, and such
meetings may be conducted in person, by videoconference or by telephone
conference (each such meeting, a “JAC Meeting”). In-person meetings of the JAC
will alternate between appropriate venues of each Party, as reasonably
determined by the Parties. The Parties shall each bear all expenses of their
respective representatives relating to their participation on the JAC. The
members of the JAC also may convene or be polled or consulted from time to time
by means of telecommunications, video or telephone conferences, electronic mail
or correspondence, as deemed necessary or appropriate.

 

  (b)

Additional JAC Meetings. Either Party may call an additional meeting of the JAC
at any time upon twenty (20) Business Days’ prior written notice if such Party
reasonably determines that there is a need for discussions at the level of a JAC
Meeting on top of the ordinary quarterly JAC Meetings, and reasonably specifies
such grounds in its notice to the other Party.

 

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  (c)

Provision of Information. Upon the request of the JAC Chairs or at least four
(4) members of the JAC, each Party will provide written materials and
information relating to matters within the purview of the JAC in advance of a
JAC Meeting. In addition, the JAC shall be informed by each Party in good faith
about any matters or issues within the purview of the JAC which a Party should
reasonably deem to be of high importance for the other Party.

 

  9.4

Areas of Responsibility.

Subject to the terms of this Agreement, the JAC shall act as a forum to discuss
in good faith in particular the following major items, matters and areas of
interest:

 

  (a)

Oversee, review and coordinate the activities of the Parties under this
Agreement;

 

  (b)

Each Facility’s overall performance under this Agreement; and

 

  (c)

Any other major matters, roles, obligations and responsibilities under this
Agreement, to the extent any Party reasonably provides such matter to the JAC
for discussion.

 

  9.5

Advisory Role; No Decision-Making Authority.

 

  (a)

Advisory Role. The JAC and its members shall only have an advisory role and
shall discuss in good faith and provide to the Parties its opinion on the
matters in its purview. The Parties agree to reasonably take into account the
opinions and views expressed by the JAC and its members for performing their
respective obligations under this Agreement.

 

  (b)

No Decision-Making Authority. The JAC shall have no decision-making authority
over the matters in its purview unless the Parties mutually decide in writing to
delegate the decision-making authority on such specific item or matter to the
JAC. Moreover, it shall not be within the authority of the JAC to (i) directly
impose on either Party or its Affiliates any additional obligation(s) or a
resolution on the Parties with respect to any dispute regarding the existence or
extent/amount of any obligation, including payments obligations, under this
Agreement, or to (ii) amend, modify or waive compliance with this Agreement.

 

10.

Indemnification; Limitations of Liability.

 

  10.1

Indemnification of Customer.

 

  (a)

Subject to the provisions of this Section 10 and, for clarity, without limiting
anything in the Separation Agreement or any other Ancillary Agreements,
Manufacturer shall indemnify, defend and hold harmless Customer, its Affiliates
and its and their respective directors, officers, managers, members, employees
and agents, and each of the heirs, executors,

 

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  successors and assigns of any of the foregoing (each, a “Customer Indemnified
Party”) from and against any and all Losses of such Customer Indemnified Parties
to the extent relating to, arising out of or resulting from any Action of a
Third Party arising out of or resulting from any of the following items (without
duplication): (i) any breach by Manufacturer or its Personnel of this Agreement
or any Facility Addendum; (ii) any injury or death of any Person due to any
breach by Manufacturer or its Personnel of this Agreement or any Facility
Addendum; (iii) the infringement or misappropriation of a Third Party’s
Intellectual Property by the use or practice by Manufacturer or its Affiliate of
any Product manufacturing process that has been changed (including as to the
facility in which such manufacturing process takes place) on or following the
Effective Date without the written approval of Customer to make such change;
(iv) Manufacturer’s supply of Non-Complying Product under this Agreement; or
(v) the gross negligence, fraud or willful misconduct of Manufacturer or its
Personnel in connection with the performance or non-performance of this
Agreement.

 

  (b)

Notwithstanding the foregoing, Manufacturer shall not be liable for Losses
described in Section 10.1(a) to the extent such Losses are: (i) caused by the
gross negligence, fraud or willful misconduct of a Customer Indemnified Party in
connection with the performance or non-performance of this Agreement;
(ii) caused by the breach of any of the terms of this Agreement or a Facility
Addendum by a Customer Indemnified Party, including in connection with the
performance or non-performance of this Agreement or (iii) subject to Customer’s
indemnification obligations pursuant to Section 10.2.

 

  10.2

Indemnification of Manufacturer.

 

  (a)

Subject to the provisions of this Section 10 and, for clarity, without limiting
anything in the Separation Agreement or any Ancillary Agreements, Customer shall
indemnify, defend and hold harmless Manufacturer, its Affiliates and its and
their respective directors, officers, managers, members, employees and agents,
and each of the heirs, executors, successors and assigns of any of the foregoing
(each, a “Manufacturer Indemnified Party”) from and against any and all Losses
of such Manufacturer Indemnified Parties to the extent relating to, arising out
of or resulting from any Action of a Third Party arising out of or resulting
from any of the following items (without duplication): (i) any breach by
Customer or its Personnel of this Agreement or any Facility Addendum; (ii) the
gross negligence, fraud or willful misconduct of Customer or its Personnel in
connection with the performance or non-performance of this Agreement; (iii) the
infringement or misappropriation of a Third Party’s Intellectual Property by the
use or practice by Manufacturer or its Affiliate in performance of this
Agreement of any Product manufacturing process that has been changed with the
written approval of Customer to make such change; (iv) Customer’s supply of
Non-Complying Customer-Supplied Materials or Non-Complying Buy-Sell Materials
under this Agreement; or (v) the use, sale, offer for sale, import or other
commercialization of any Product (including any injury or death of any Person
due to any of the foregoing in this clause (v)).

 

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  (b)

Notwithstanding the foregoing, Customer shall not be liable for Losses described
in Section 10.2(a) to the extent such Losses are: (i) caused by the gross
negligence, fraud or willful misconduct of a Manufacturer Indemnified Party in
connection with the performance or non-performance of this Agreement;
(ii) caused by the breach of any of the terms of this Agreement or any Facility
Addendum by a Manufacturer Indemnified Party or (iii) are subject to
Manufacturer’s indemnification obligation pursuant to Section 10.1. Furthermore,
Customer shall not be liable for Losses pursuant to Section 10.2(a)(iii) above
to the extent such infringement or misappropriation is caused by Manufacturer’s
unauthorized use or unauthorized modification of any Customer Property,
Customer-Owned Improvements and Developments, Buy-Sell Materials or
Customer-Supplied Materials.

 

  10.3

Indemnification Procedures.

 

  (a)

If, at or following the date of this Agreement, any Person entitled to be
indemnified under this Section 10 (the “Indemnitee”) shall receive notice or
otherwise learn of the assertion by a Person (including any Governmental
Authority) who is not a member of the Pluto Group or the Spinco Group of any
claim or of the commencement by any such Person of any Action with respect to
which the Party from whom indemnification may be sought under this Section 10
(the “Indemnifying Party”) (such claim, a “Third-Party Claim”), such Indemnitee
shall give such Indemnifying Party written notice thereof as promptly as
practicable, but in any event within thirty (30) days (or sooner if the nature
of the Third-Party Claim so requires) after becoming aware of such Third-Party
Claim. Any such notice shall describe the Third-Party Claim in reasonable
detail, including the facts and circumstances giving rise to such claim for
indemnification, and include copies of all notices and documents (including
court papers) received by the Indemnitee relating to the Third-Party Claim.
Notwithstanding the foregoing, the failure of any Indemnitee to provide notice
as provided in this Section 10.3(a) shall not relieve an Indemnifying Party of
its obligations under this Section 10, except to the extent, and only to the
extent, that such Indemnifying Party is materially prejudiced by such failure to
give notice in accordance with this Section 10.3(a).

 

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  (b)

An Indemnifying Party may elect (but shall not be required) to defend (and seek
to settle or compromise), at such Indemnifying Party’s own expense and by such
Indemnifying Party’s own counsel (which counsel shall be reasonably satisfactory
to the Indemnitee), any Third-Party Claim; provided that the Indemnifying Party
shall not be entitled to defend such Third-Party Claim and shall pay the
reasonable fees and expenses of one separate counsel for all Indemnitees if the
claim for indemnification relates to or arises in connection with any criminal
action, indictment or allegation or if such Third-Party Claim seeks an
injunction or equitable relief against the Indemnitee (and not any Indemnifying
Party or any of its Affiliates). Within thirty (30) days after the receipt of
notice from an Indemnitee in accordance with Section 10.3(a) (or sooner, if the
nature of such Third-Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third-Party Claim, which election shall
specify any reservations or exceptions to its defense. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnitee shall have the right to employ separate
counsel and to participate in (but not control) the defense, compromise, or
settlement thereof, but the fees and expenses of such counsel shall be the
expense of such Indemnitee; provided, however, in the event that the
Indemnifying Party has elected to assume the defense of the Third-Party Claim
but has specified, and continues to assert, any reservations or exceptions in
such notice, then, in such case, the reasonable fees and expenses of one
separate counsel for all Indemnitees shall be borne by the Indemnifying Party;
and provided further that the Indemnifying Party will pay the reasonable fees
and expenses of such separate counsel if, based on the reasonable opinion of
legal counsel to the Indemnitee, a conflict or potential conflict of interest
exists between the Indemnifying Party and the Indemnitee which makes
representation of both parties inappropriate under applicable standards of
professional conduct.

 

  (c)

If an Indemnifying Party elects not to assume responsibility for defending a
Third-Party Claim, or fails to notify an Indemnitee of its election as provided
in Section 10.3(b), then the applicable Indemnitee may defend such Third-Party
Claim at the cost and expense of the Indemnifying Party to the extent
indemnification is available under the terms of this Agreement. If an
Indemnifying Party elects not to assume responsibility for defending a
Third-Party Claim, or fails to notify an Indemnitee of its election as provided
in Section 10.3(b), then, it shall not be a defense to any obligation of the
Indemnifying Party to pay any amount in respect of such Third-Party Claim that
the Indemnifying Party was not consulted in the defense thereof, that such
Indemnifying Party’s views or opinions as to the conduct of such defense were
not accepted or adopted, that such Indemnifying Party does not approve of the
quality or manner of the defense thereof or, subject to Section 10.3(d), that
such Third-Party Claim was incurred by reason of a settlement rather than by a
judgment or other determination of liability.

 

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  (d)

Neither Party may settle or compromise any Third-Party Claim for which either
Party is seeking to be indemnified hereunder without the prior written consent
of the other Party, which consent may not be unreasonably withheld, conditioned
or delayed, unless such settlement or compromise is solely for monetary damages
that are fully payable by the settling or compromising party, does not involve
any admission, finding or determination of wrongdoing or violation of Law by the
other Party and provides for a full, unconditional and irrevocable release of
the other Party from all Liability in connection with the Third-Party Claim.

 

  10.4

Limitations on Liability.

 

  (a)

Except in the event of (i) Third Party Claims subject to a Party’s
indemnification obligations pursuant to Section 10.1, (ii) Third Party Claims
subject to a Party’s indemnification obligations pursuant to Section 10.2, (iii)
the gross negligence, fraud or willful misconduct of a Party or its Personnel,
(iv) a Party’s willful breach of this Agreement, (v) a breach of Section 13 or
(vi) customer liabilities pursuant to, and subject to the limitations set forth
in, Section 2.5(e), neither Party’s aggregate liability to the other Party (or
its Personnel that are indemnitees under Section 10.1 or Section 10.2, as
applicable) under this Agreement for the initial twelve (12) month period
immediately following the Effective Date, and for any twelve (12) month period
thereafter during the Term, shall exceed, on a cumulative basis, the amount that
is one and one half (11⁄2) times the aggregate amounts paid or payable pursuant
to this Agreement in the preceding twelve (12) month period preceding the loss
date by Customer to Manufacturer but solely with respect to the supply hereunder
of Product (or Products) for which such corresponding liability arose (the
“Affected Products”) and not any other Products (or if, as of the time the
liability arises, this Agreement has not been in effect for twelve (12) months,
then the amounts paid or payable by Customer to Manufacturer hereunder during
the period from the Effective Date until such time the liability arises, shall
be annualized to a full twelve (12) months but solely with respect to the supply
hereunder of the Affected Product(s) and not any other Products).

 

  (b)

NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, EXCEPT
FOR DAMAGES OR CLAIMS ARISING OUT OF (I) A BREACH OF SECTION 13 OF THIS
AGREEMENT, (II) CUSTOMER LIABILITIES PURSUANT TO, AND SUBJECT TO THE LIMITATIONS
SET FORTH IN, SECTION 2.5(E), (III) A PARTY’S OR ITS PERSONNEL’S GROSS
NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT, (IV) A PARTY’S WILLFUL BREACH OF THIS
AGREEMENT, OR (V) A PARTY’S INDEMNIFICATION OBLIGATION WITH RESPECT TO THIRD
PARTY CLAIMS UNDER SECTION 10.1 OR SECTION 10.2, IN NO EVENT SHALL EITHER PARTY
BE LIABLE TO THE OTHER PARTY OR ANY INDEMNIFIED PARTY HEREUNDER FOR ANY
CONSEQUENTIAL DAMAGES, SPECIAL DAMAGES, INCIDENTAL OR INDIRECT DAMAGES, LOSS OF
REVENUE OR PROFITS, DIMINUTION IN VALUE, DAMAGES BASED ON MULTIPLE OF

 

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  REVENUE OR EARNINGS OR OTHER PERFORMANCE METRIC, LOSS OF BUSINESS REPUTATION,
PUNITIVE AND EXEMPLARY DAMAGES OR ANY SIMILAR DAMAGES ARISING OR RESULTING FROM
OR RELATING TO THIS AGREEMENT, WHETHER SUCH ACTION IS BASED ON WARRANTY,
CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE.

 

  10.5

Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

 

  (a)

The Parties intend that any Loss subject to indemnification or reimbursement
pursuant to this Section 10 will be net of Insurance Proceeds or other amounts
actually recovered (net of any out-of-pocket costs or expenses incurred in the
collection thereof) from any Person by or on behalf of the Indemnitee in respect
of any indemnifiable Liability. Accordingly, the amount that any Indemnifying
Party is required to pay to any Indemnitee will be reduced by any Insurance
Proceeds or other amounts actually recovered (net of any out-of-pocket costs or
expenses incurred in the collection thereof) from any Person by or on behalf of
such Indemnitee in respect of the related Loss. If an Indemnitee receives a
payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying
Party in respect of any Loss and subsequently receives Insurance Proceeds or any
other amounts in respect of the related Loss, then the Indemnitee will pay to
the Indemnifying Party an amount equal to the excess of the Indemnity Payment
received over the amount of the Indemnity Payment that would have been due if
the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or
expenses incurred in the collection thereof) had been received, realized or
recovered before the Indemnity Payment was made.

 

  (b)

An insurer that would otherwise be obligated to pay any claim shall not be
relieved of the responsibility with respect thereto or, solely by virtue of any
provisions contained in this Agreement, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no insurer or any other
Third Party shall be entitled to a “wind-fall” (i.e., a benefit that such
insurer or other Third Party would not be entitled to receive in the absence of
the indemnification provisions) by virtue of the indemnification provisions
hereof. Each Party shall, and shall cause the members of its Group to, use
commercially reasonable efforts (taking into account the probability of success
on the merits and the cost of expending such efforts, including attorneys’ fees
and expenses) to collect or recover any Insurance Proceeds that may be
collectible or recoverable respecting the Liabilities for which indemnification
may be available under this Section 10. Notwithstanding the foregoing, an
Indemnifying Party may not delay making any indemnification payment required
under the terms of this Agreement, or otherwise satisfying any indemnification
obligation, pending the outcome of any Action to collect or recover Insurance
Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds
prior to making a claim for indemnification or receiving any Indemnity Payment
otherwise owed to it under this Agreement or any Ancillary Agreement.

 

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  10.6

Additional Matters.

 

  (a)

Indemnification payments in respect of any Liabilities for which an Indemnitee
is entitled to indemnification under this Section 10 shall be paid reasonably
promptly (but in any event within sixty (60) days of the final determination of
the amount that the Indemnitee is entitled to indemnification under this
Section 10) by the Indemnifying Party to the Indemnitee as such Liabilities are
incurred upon demand by the Indemnitee, including reasonably satisfactory
documentation setting forth the basis for the amount of such indemnification
payment, documentation with respect to calculations made and consideration of
any Insurance Proceeds that actually reduce the amount of such Liabilities.

 

  (b)

If (i) a Party incurs any Liability arising out of this Agreement or any
Ancillary Agreement; (ii) an adequate legal or equitable remedy is not available
for any reason against the other Party to satisfy the Liability incurred by the
incurring Party; and (iii) a legal or equitable remedy may be available to the
other Party against a Third Party for such Liability, then the other Party shall
use its commercially reasonable efforts to cooperate with the incurring Party,
at the incurring Party’s expense, to permit the incurring Party to obtain the
benefits of such legal or equitable remedy against the Third Party.

 

  (c)

If payment is made by or on behalf of any Indemnifying Party to any Indemnitee
in connection with any Third-Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right, defense
or claim relating to such Third-Party Claim against any claimant or plaintiff
asserting such Third-Party Claim or against any other Person. Such Indemnitee
shall cooperate with such Indemnifying Party in a reasonable manner, and at the
cost and expense of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.

 

  (d)

In the event of an Action in which the Indemnifying Party is not a named
defendant, if either the Indemnitee or Indemnifying Party shall so request, the
Parties shall endeavor to substitute the Indemnifying Party for the named
defendant or otherwise add the Indemnifying Party as party thereto, if at all
practicable. If such substitution or addition cannot be achieved for any reason
or is not requested, the named defendant shall allow the Indemnifying Party to
manage the Action as set forth in this Section 10, and the Indemnifying Party
shall fully indemnify the named defendant against all costs of defending the
Action (including court costs, sanctions imposed by a court, attorneys’ fees,
experts fees and all other external expenses), the costs of any judgment or
settlement, and the cost of any interest or penalties relating to any judgment
or settlement with respect to such Third-Party Claim.

 

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11.

Insurance.

 

  11.1

Requirements to Maintain. During the Term, Manufacturer shall self-insure or
shall provide and maintain such insurance coverage, in minimum types and amounts
as described below in this Section 11.

 

  (a)

Any and all deductibles or retentions for such insurance policies shall be
assumed by, for the account of, and at Manufacturer’s sole risk.

 

  (b)

To the extent of the liabilities assumed by Manufacturer under this Agreement,
such insurance policies of Manufacturer shall be primary and non-contributing
with respect to any other similar insurance policies available to Customer or
its Affiliates.

 

  (c)

Manufacturer shall furnish to Customer certificates of insurance (electronic is
acceptable), evidencing the required insurance coverage, upon execution of this
Agreement and annually, thereafter.

 

  11.2

Amounts and Limits. The insurance required under this Section 11 shall be
written for not less than any limits of liability specified herein or as
required by applicable Law, whichever is greater. All insurance carriers shall
have a minimum of “A-” A.M. Best rating. Manufacturer shall have the right to
provide the total limits required by any combination of self-insurance, primary
and umbrella/excess coverage; said insurance to include the following:

 

  (a)

Insurance for liability under the workers’ compensation or occupational disease
Laws of any state of the United States (or be a qualified self-insurer in those
states of the United States) or otherwise applicable with respect to Persons
performing the services and employer’s liability insurance covering all claims
by or in respect to the employees of Manufacturer, providing:

 

  (i)

Coverage for the statutory limits of all claims under the applicable State
Workers’ Compensation Act or Acts. If a Facility Addendum will result in
exposures under the U.S. Longshore and Harbor Workers’ Compensation Act and its
amendments (work dockside or on water), the Jones Act (involving seamen, masters
and crew of vessels) or the Federal Employers’ Liability Act (railroad
exposure), coverage shall be extended to include insurance coverages mandated
thereby;

 

  (ii)

Employer’s liability insurance with a limit of not less than $1,000,000;

 

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  (iii)

Manufacturer warrants that all of its employees involved in this Agreement are
covered by statutory workers’ compensation; and

 

  (iv)

Where allowed by Applicable Law, Customer and its Affiliates shall be provided a
waiver of subrogation, except for losses due to the sole negligence of
Manufacturer.

 

  (b)

Commercial general liability insurance with the following limits and
forms/endorsements:

Each Occurrence:    $2,000,000

 

  (i)

Occurrence form including premises and operations coverage, property damage,
liability, personal injury coverage, products and completed operations coverage,
and transit.

 

  (ii)

To the extent of Manufacturer’s indemnification obligations, Customer and its
Affiliates shall be additional insureds via ISO form CG20101185 or its
equivalent.

 

  (c)

Automobile and Truck Liability Insurance: $2,000,000 combined single limit for
bodily injury and property damage arising out of all owned, non- owned and hired
vehicles, including coverage for all automotive and truck equipment used in the
performance of this Agreement and including the loading and unloading of same.

 

  (d)

Umbrella (excess) liability coverage in an amount not less than $3,000,000 per
occurrence and in the aggregate.

 

  (e)

If Manufacturer has care, custody or control of Customer-Supplied Material,
Manufacturer shall be responsible for any loss or damage to it and provide all
risk property coverage at full replacement cost for property and at the
costs-per-unit as specified in the Facility Addendum for inventory.

 

12.

Customer-Supplied Materials; Buy-Sell Materials; Transition.

 

  12.1

Supply; Rejection; Transition.

 

  (a)

Customer shall at its own expense supply Manufacturer with the Customer-Supplied
Materials identified in the applicable Facility Addendum. Customer shall supply
Manufacturer with the Buy-Sell Materials at a price that Customer determines,
subject to Section 3.2(c), and communicates to Manufacturer. At Customer’s
option, the Customer-Supplied Materials and Buy-Sell Materials may be delivered
directly from Customer’s Third-Party vendor to Manufacturer at the vendor’s or
Customer’s expense. Customer or its vendor shall supply Manufacturer with a copy
of the certificate of analysis for the Customer-Supplied Materials and Buy-Sell
Materials no later than delivery of the Customer-Supplied Materials or Buy-Sell

 

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  Materials to Manufacturer. Customer hereby covenants to Manufacturer that each
Customer-Supplied Material and Buy-Sell Materials furnished by or on behalf of
Customer to Manufacturer or its Affiliate or designee under this Agreement will,
upon delivery by Customer to Manufacturer pursuant to this Agreement, comply
with, and have been used, handled and stored in accordance with, the
specifications for such Customer-Supplied Materials or Buy-Sell Materials (as
applicable), all applicable Laws, the Quality Agreement, this Agreement and the
applicable Facility Addendum and otherwise have no defects. Manufacturer’s
obligations to manufacture and supply Product under this Agreement are subject
to and conditioned upon Customer’s timely delivery of Customer-Supplied Material
and Buy-Sell Materials in accordance with this Section 12.

 

  (b)

Manufacturer shall provide to Customer a monthly rolling forecast of its
requirements for Customer-Supplied Materials and Buy-Sell Materials based upon
Customer’s Forecasts for Products, and Manufacturer shall issue to Customer “pro
forma” purchase orders for Customer-Supplied Materials and actual purchase
orders for Buy-Sell Materials, in each case, according to parameters included in
the applicable Facility Addendum, including safety stock and lead time
requirements. Manufacturer shall be responsible to receive, sample, store and
maintain the inventory of such ordered Customer-Supplied Materials and Buy-Sell
Materials at Manufacturer’s Facility.

 

  (c)

Within each calendar month during the Term, Manufacturer will provide a monthly
inventory report of Customer-Supplied Materials substantially in the format
attached as Attachment C to this Agreement. The Parties acknowledge and agree
that the Manufacturer’s timely providing the referenced monthly inventory report
is a critical component of the Customer’s Customer-Supplied Materials management
program and further that any such failure on the part of Manufacturer to timely
provide such monthly inventory report shall be addressed at the immediately
following scheduled JAC Meeting.

 

  (d)

Manufacturer may reject any Non-Complying Buy-Sell Materials or Non-Complying
Customer-Supplied Materials by (i) providing Customer with no less than sixty
(60) days’ prior written notice of Manufacturer’s intention to reject along with
the documentation setting forth in reasonable detail the basis for rejection,
(ii) meeting with Customer at Customer’s request to discuss the basis for the
proposed rejection, and (iii) providing Customer with notice of rejection in the
event that Manufacturer rejects the subject Non-Complying Buy-Sell Materials or
Non-Complying Customer-Supplied Materials (as applicable) at the end of such
sixty (60) day period (or such other time frame as the Parties may agree upon).

 

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  (e)

Customer shall submit invoices to Manufacturer upon delivery to Manufacturer or
its applicable Affiliate of Buy-Sell Materials, and Manufacturer shall make
payments with respect thereto, in accordance with the invoice and payment
requirements set forth in Section 3.5, applied correlatively, and the parties
shall discuss in good faith further requirements with respect to the supply of
Buy-Sell Materials.

 

  (f)

Customer shall use its commercially reasonable efforts to convert all Buy-Sell
Materials arrangements to Customer-Supplied Materials arrangements as promptly
as practicable after the Effective Date; provided that Customer shall provide
updates with respect to such efforts at each JAC Meeting until all such Buy-Sell
Materials arrangements shall have been converted to Customer-Supplied Materials
arrangements.

 

  12.2

Title and Risk of Loss.

 

  (a)

Title to the Customer-Supplied Materials supplied by Customer to Manufacturer
shall remain with Customer; provided, however, that risk of loss shall pass to
Manufacturer at the time Customer-Supplied Materials are delivered to the
Manufacturer DDP (Incoterms 2010) at the applicable Facility. Manufacturer shall
not use Customer-Supplied Materials for any purposes other than those related to
the manufacture of a Product pursuant to this Agreement.

 

  (b)

The risk of loss or damage to Customer-Supplied Materials during the possession
thereof by Manufacturer shall be solely with Manufacturer.

 

  (c)

Manufacturer shall insure or self-insure the Customer-Supplied Materials and
Products while such is in Manufacturer’s possession at an agreed-upon value.

 

  (d)

The title and risk of loss for Buy-Sell Materials shall pass to Manufacturer
upon delivery to the Manufacturer DDP (Incoterms 2010) at the applicable
Facility.

 

  12.3

Reimbursement for Loss of Customer-Supplied Materials. Manufacturer shall
reimburse Customer for excess Customer-Supplied Materials used as a result of
Manufacturer’s failure to achieve the minimum average yield or usage (as
applicable) set forth in the applicable Facility Addendum. During the first
quarter of each Fiscal Year during the Term of this Agreement, Manufacturer will
report to Customer the actual yield achieved for all Customer-Supplied Materials
used during the previous calendar year on a Facility-by-Facility basis. If the
achieved yield is lower than the minimum average yield specified in the
applicable Facility Addendum on an aggregated basis for all Customer-Supplied
Materials for each applicable Facility Addendum, then Manufacturer will
reimburse to Customer the actual cost of the excess Customer-Supplied Materials
used as set forth in the applicable Facility Addendum. For the avoidance of
doubt, (a) rejected batches and all Customer-Supplied Material that is, for any
reason other than a determination that such Customer-Supplied Materials are
non-conforming, not incorporated into Product delivered hereunder, shall be
included in the annual yield calculation and (b) Customer-Supplied Materials for
which Manufacturer is responsible for reimbursing Customer pursuant to
Section 4.11(b) shall not be included in the annual yield calculation.

 

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13.

Confidentiality.

The confidentiality obligations of the Parties and their respective Groups with
respect to disclosures of information hereunder shall be governed, mutatis
mutandis, by Section 6.08, Section 6.09 and Section 6.10 of the Separation
Agreement.

 

14.

Supply Chain Security.

 

  14.1

Supply Chain Representations.

Manufacturer represents, warrants and covenants to Customer that:

Manufacturer has reviewed its supply chain security procedures and that these
procedures and their implementation are, and shall remain during the Term of
this Agreement, in accordance with the importer security criteria set forth by
the “C-TPAT.” Manufacturer represents and warrants that it has developed and
implemented, or shall develop and implement within sixty (60) calendar days of
its execution of this Agreement, procedures for periodically reviewing and, if
necessary, improving its supply chain security procedures to assure compliance
with C-TPAT minimum security criteria.

 

  14.2

C-TPAT.

Manufacturer acknowledges that Customer is a certified member of C-TPAT. As a
C-TPAT member, Customer is required to make periodic assessment of its
international supply chain based upon C-TPAT security criteria. Manufacturer
agrees to conduct and document an annual security audit at each of its
Facilities and to take all necessary corrective actions to ensure the continued
participation of Customer in C-TPAT. Manufacturer agrees to share with Customer
the results of such annual audits and agrees to prepare and submit to Customer a
report on the corrective actions taken in response thereto. In addition,
Customer may audit Manufacturer’s Records and Facilities for the purpose of
verifying that Manufacturer’s procedures are in accordance with the C-TPAT
security criteria, and Manufacturer shall provide Customer with access to
Manufacturer’s Records and Facilities reasonably necessary for the purpose of
conducting such audit. Manufacturer agrees to notify Customer of any event that
has resulted in or threatens the loss of its C-TPAT Benefits (if it is a member
of the C-TPAT program) or alternatively jeopardizes Customer’s retention of its
own C-TPAT Benefits. In an effort to secure each part of the supply chain,
Manufacturer agrees to work in good faith to become a member of the C-TPAT
program, if Manufacturer is organized or incorporated in the United States,
Mexico or Canada, or the equivalent supply chain security program criteria
administered by the customs administration in Manufacturer’s home country if
Manufacturer is not organized or incorporated in the United States, Mexico or
Canada.

 

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15.

Records and Audits.

 

  15.1

Records.

Manufacturer will maintain complete and accurate Records. Any Records that are
financial in nature such as, but not limited to, time sheets, billing Records,
invoices, payment applications, payments of consultants and subcontractors and
receipts relating to reimbursable expenses shall be maintained in accordance
with applicable Law in the jurisdiction in which the applicable Facility is
located. Manufacturer shall maintain such Records for a period equal to the
later of (x) three (3) years after the expiration or termination of this
Agreement or the applicable Facility Addendum, (y) the expiration of the statute
of limitation for the Tax period applicable to such Records, or (z) for such
period as otherwise may be required by applicable Law (the “Record Retention
Period”).

 

  15.2

Audits.

Customer or its representatives, including its external auditors, may audit such
Records of Manufacturer, including all Records related to Manufacturer’s
compliance with applicable Laws, at any time during the Term of this Agreement
or applicable Facility Addendum or the Record Retention Period, during normal
business hours and upon reasonable advance written notice to Manufacturer (but
in no event more than one (1) time per year except “for cause”). Manufacturer
shall make such Records readily available for such audit. Any Records or
information accessed or otherwise obtained by Customer or its representatives in
connection with any audit (including any audit pursuant to Section 3.4) shall be
deemed Manufacturer’s confidential and proprietary Information and each
representative of Customer will be subject to non-use and other confidentiality
obligations substantially comparable to those set forth herein for Customer.
Except as otherwise provided in Section 3.4, if any financial audit reveals that
Manufacturer has overcharged Customer, Manufacturer shall reimburse Customer for
such overcharge within thirty (30) days of Manufacturer’s receipt of the
relevant audit results, and in the event that any such overcharge equals an
amount equal to or greater than five percent (5%) of the total amounts invoiced
during the period under such audit, then Manufacturer shall promptly reimburse
Customer for all reasonable Third Party costs and expenses actually incurred in
the conduct of such audit. If any financial audit reveals that Customer has
underpaid Manufacturer, Customer shall reimburse Manufacturer for such
underpayment within thirty (30) days of Customer’s receipt of the relevant audit
results. For clarity, if there is a conflict between Section 3.4(a) and this
Section 15.2 with respect to the review of a Price increase, Section 3.4(a)
shall govern and control.

 

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16.

AG and Branded Product Supply Agreement. Notwithstanding anything to the
contrary herein, the Parties hereby agree that all determinations for purposes
of this Agreement which include calculations or other determinations that
involve the aggregation of data related to more than one Product (under this
Agreement or under the AG and Branded Product Supply Agreement) shall be made by
taking into account the aggregate manufacture of Products pursuant to the AG and
Branded Product Supply Agreement and this Agreement. Notwithstanding anything to
the contrary herein, and without limiting the foregoing, the Parties hereby
agree that (i) all Facility-level determinations for purposes of this Agreement,
including with respect to Facility Actual Product Materials Cost, Facility
Estimated Product Materials Cost, Facility Conversion Cost, Facility Conversion
Cost Threshold, Facility Conversion Cost Adjustment Fiscal Year, Facility
Conversion Cost Baseline Fiscal Year and other matters relating to potential
adjustments to the Price of Product, shall be made by taking into account the
aggregate manufacture of Products at the applicable Facility pursuant to the AG
and Branded Product Supply Agreement and this Agreement, and shall not be
limited to the manufacture of Products at such Facility pursuant to the
applicable Facility Addendum under this Agreement and (ii) all calculations or
other determinations relating to the aggregate liability of each Party under
Section 10.4(a) or the aggregate liability of Manufacturer in the event of a
Triggering Event under Section 2.5(e) for purposes of this Agreement shall be
made by taking into account the aggregate manufacture of Products pursuant to
the AG and Branded Product Supply Agreement and this Agreement, and shall not be
limited to the manufacture of Products under this Agreement.

 

17.

Notices.

All notices or other communications hereunder shall be deemed to have been duly
given and made if in writing and (a) when served by personal delivery upon the
Party for whom it is intended; (b) one (1) Business Day following the day sent
by overnight courier, return receipt requested; (c) when sent by facsimile;
provided that the facsimile is promptly confirmed; or (d) when sent by e-mail;
provided that a copy of the same notice or other communication sent by e-mail is
also sent by overnight courier, return receipt requested, personal delivery, or
facsimile as provided herein, on the same day as such e-mail is sent, in each
case to the Person at the address, facsimile number or e-mail address set forth
below, or such other address, facsimile number or e-mail address as may be
designated in writing hereafter, in the same manner, by such Person:

If to Customer:            Viatris Inc.

1000 Mylan Boulevard

Canonsburg, PA 15317

ATTENTION:              Michael Goettler

EMAIL ADDRESS:     michael.goettler@viatris.com

 

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with copies (which shall not constitute notice) to:

   Viatris Inc.    1000 Mylan Boulevard    Canonsburg, PA 15317    Attention:   
Brian S. Roman, Global General Counsel    Facsimile:    (724) 514-1871    Email:
   Brian.Roman@viatris.com    Cravath, Swaine & Moore LLP    825 8th Ave    New
York, New York 10019    ATTENTION:    Mark I. Greene       Thomas E. Dunn      
Aaron M. Gruber    EMAIL ADDRESS:    mgreene@cravath.com       tdunn@cravath.com
      agruber@cravath.com

If to Manufacturer:

   Pfizer Inc.       235 East 42nd Street    New York, New York 10017   
ATTENTION:    Douglas M. Lankler       Bryan A. Supran    EMAIL ADDRESS:   
douglas.lankler@pfizer.com       bryan.supran@pfizer.com

with a copy (which shall not constitute notice) to:

   Wachtell, Lipton, Rosen & Katz    51 West 52nd Street    New York, New York
10019    ATTENTION:    Edward D. Herlihy       David K. Lam       Gordon S.
Moodie       Zachary S. Podolsky    EMAIL ADDRESS:    EDHerlihy@WLRK.com      
DKLam@WLRK.com       GSMoodie@WLRK.com       ZSPodolsky@WLRK.com

Either Party may, by notice to the other Party, change the addresses and names
applicable to such Party given above.

 

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18.

Miscellaneous.

 

  18.1

Negotiations of Dispute.

The dispute resolution procedures set forth in Article VII of the Separation
Agreement shall apply mutatis mutandis with respect to any controversy, claim,
counterclaim, dispute, difference or misunderstanding arising out of or relating
to the interpretation or application of any term or provisions of this
Agreement, a Purchase Order or Facility Addendum. Further, the requirement to
attempt to resolve a dispute in accordance with this Section 18.1 does not
affect a Party’s right to terminate this Agreement or a Purchase Order as
provided in Section 7 hereof, and neither Party shall be required to follow
these procedures prior to terminating this Agreement.

 

  18.2

Publicity.

Manufacturer shall not use the name, trade name, service marks, trademarks,
trade dress or logos of Customer (or any of its Affiliates) in publicity
releases, advertising or any other publication, nor identify Customer as a
customer, without Customer’s prior written consent in each instance. Customer
shall not use the name, trade name, service marks, trademarks, trade dress or
logos of Manufacturer (or any of its Affiliates) in publicity releases,
advertising or any other publication, without Manufacturer’s prior written
consent in each instance. Nothing in this Section 18.2 shall or is intended to
limit any Party’s rights under the Separation Agreement or any Ancillary
Agreement.

 

  18.3

Governing Law and Venue.

 

  (a)

This Agreement and all Actions (whether in contract or tort) that may be based
upon, arise out of or relate to this Agreement or the negotiation, execution or
performance hereof or thereof shall be governed by and construed in accordance
with the Law of the State of Delaware, without regard to any Laws or principles
thereof that would result in the application of the Laws of any other
jurisdiction. The Parties expressly waive any right they may have, now or in the
future, to demand or seek the application of a governing Law other than the Law
of the State of Delaware.

 

  (b)

Each of the Parties hereby irrevocably and unconditionally submits to the
exclusive jurisdiction of the Court of Chancery of the State of Delaware or, if
such court shall not have jurisdiction, the United States District Court for the
District of Delaware, and any appellate court from any appeal thereof, in any
Action arising out of or relating to this Agreement or the transactions
contemplated hereby, and each of the Parties hereby irrevocably and
unconditionally (i) agrees not to commence any such Action except in such
courts, (ii) agrees that any claim in respect of any such Action may be heard
and determined in the Court of Chancery of the State of Delaware or, to the
extent permitted by Law, in such other courts, (iii) waives, to the fullest

 

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  extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such Action in the Court of
Chancery of the State of Delaware or such other courts, (iv) waives, to the
fullest extent permitted by Law, the defense of an inconvenient forum to the
maintenance of such Action in the Court of Chancery of the State of Delaware or
such other courts and (v) consents to service of process in the manner provided
for notices in Section 17. Nothing in this Agreement will affect the right of
any Party to serve process in any other manner permitted by Law.

 

  (c)

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY OF THE OTHER ANCILLARY AGREEMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (INCLUDING THE FINANCING). EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVERS,
(II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
(III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.3(C).

 

  18.4

Relationship of the Parties.

The relationship hereby established between Customer and Manufacturer is solely
that of independent contractors. Manufacturer has no authority to act or make
any agreements or representations on behalf of Customer or its Affiliates. This
Agreement is not intended to create, and shall not be construed as creating,
between Manufacturer and Customer, the relationship of fiduciary, principal and
agent, employer and employee, joint venturers, co-partners, or any other such
relationship, the existence of which is expressly denied. No employee or agent
engaged by Manufacturer shall be, or shall be deemed to be, an employee or agent
of Customer and shall not be entitled to any benefits that Customer provides to
its own employees.

 

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  18.5

Assignment; Binding Effect.

 

  (a)

Except as otherwise provided in this Section 18.5, neither Party shall assign
this Agreement or any rights, benefits or obligations under or relating to this
Agreement, in each case whether by operation of law or otherwise, without the
other Party’s prior written consent (not to be unreasonably withheld,
conditioned or delayed).

 

  (b)

Either Party may assign its rights and obligations under this Agreement to one
or more of its Affiliates without the other Party’s consent; provided that such
Affiliate remains at all times during the Term an Affiliate of such Party;
provided, further, that no such assignment shall release such Party from its
obligations under this Agreement.

 

  (c)

Customer may, without Manufacturer’s consent, assign the rights and obligations
of this Agreement (i) on a Product-by-Product basis, to a Third Party in
connection with a bona fide transfer, sale or divestiture of all or
substantially all of its business to which such Product relates or in the event
of such business’s spin-off, merger or consolidation with another company or
business entity or (ii) to any Third Party which acquires or succeeds to all or
substantially all of the assets of the business of Customer to which this
Agreement and the Facility Addenda relate (including in connection with such
business’s spin-off, merger or consolidation with another company or business
entity).

 

  (d)

Subject to Section 7.4, Manufacturer may, without Customer’s consent, assign the
rights and obligations of this Agreement (i) on a Facility-by-Facility basis, to
a Third Party in connection with a bona fide transfer, sale or divestiture of
such Facility or (ii) to any Third Party which acquires or succeeds to all or
substantially all of the assets of the business of Manufacturer to which this
Agreement and the Facility Addendum relates (including in connection with such
business’s spin-off, merger or consolidation with another company or business
entity).

 

  (e)

Notwithstanding anything to the contrary in this Agreement, neither Party may
assign this Agreement in whole or in part to a Restricted Party.

 

  (f)

In the event of a permitted assignment, this Agreement shall be binding upon and
inure to the benefit of the Parties and their respective permitted successors
and permitted assigns. Any attempted assignment that contravenes the terms of
this Agreement shall be void ab initio and of no force or effect.
Notwithstanding anything contained in this Agreement, each Party hereby
acknowledges and agrees that the other Party may perform any of its obligations,
and exercise any of its rights, under this Agreement, any Facility Addendum and
Quality Agreement through any of its Affiliates.

 

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  18.6

Force Majeure.

Subject to Manufacturer’s obligations under Section 2.5(a), no Party shall be
liable for any failure to perform or any delays in performance, and no Party
shall be deemed to be in breach or default of its obligations set forth in this
Agreement, if, to the extent and for so long as, such failure or delay is due to
any causes that are beyond its reasonable control and not to its acts or
omissions, including, without limitation, such causes as acts of God, natural
disasters, hurricane, flood, severe storm, earthquake, civil disturbance,
lockout, riot, order of any court or administrative body, embargo, acts of
Government, war (whether or not declared), acts of terrorism, or other similar
causes (“Force Majeure Event”). For clarity, raw material price increases,
unavailability of raw materials, and labor disputes shall not be deemed a Force
Majeure Event. In the event of a Force Majeure Event, the Party prevented from
or delayed in performing shall promptly give notice to the other Party and shall
use commercially reasonable efforts to avoid or minimize the delay. In the event
that the delay continues for a period of at least sixty (60) calendar days, the
Party affected by the other Party’s delay may elect to (a) suspend performance
and extend the time for performance for the duration of the Force Majeure Event
or (b) cancel all or any part of the unperformed part of this Agreement or any
Purchase Orders.

 

  18.7

Severability.

If any provision of this Agreement or the application of any provision thereof
to any Person or circumstance, is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement shall remain in
full force and effect. The Parties further agree that if any provision contained
herein is, to any extent, held invalid or unenforceable in any respect under the
Laws governing this Agreement, they shall take any actions necessary to render
the remaining provisions of this Agreement valid and enforceable to the fullest
extent permitted by Law and, to the extent necessary, shall amend or otherwise
modify this Agreement to replace any provision contained herein that is held
invalid or unenforceable with a valid and enforceable provision giving effect to
the intent of the Parties.

 

  18.8

Non-Waiver; Remedies.

Waiver by any Party of any default by the other Party of any provision of this
Agreement shall not be deemed a waiver by the waiving Party of any subsequent or
other default, nor shall it prejudice the rights of the other Party. No failure
or delay by a Party in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall a single or partial
exercise thereof prejudice any other or further exercise thereof or the exercise
of any other right, power or privilege.

All remedies specified in this Agreement shall be cumulative and in addition to
any other remedies provided at Law or in equity.

 

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  18.9

Further Documents.

Each Party hereto agrees to execute such further documents and take such further
steps as may be reasonably necessary or desirable to effectuate the purposes of
this Agreement.

 

  18.10

Forms.

The Parties recognize that, during the Term of this Agreement, a Purchase Order
acknowledgment form or similar routine document (collectively, “Forms”) may be
used to implement or administer provisions of this Agreement. The Parties agree
that the terms of this Agreement shall govern and control in the event of any
conflict between terms of this Agreement and the terms of such Forms, and any
additional or different terms contained in such Forms shall not apply to this
Agreement.

 

  18.11

Headings; Interpretation.

(a) The captions in this Agreement are for convenience only and shall not be
considered a part of or affect the construction or interpretation of any
provision of this Agreement.

(b) The definitions in Section 1 shall apply equally to both the singular and
plural forms of the terms defined.

(c) Unless the context of this Agreement otherwise requires:

(i) (A) words of any gender include each other gender and neuter form; (B) words
using the singular or plural number also include the plural or singular number,
respectively; (C) derivative forms of defined terms will have correlative
meanings; (D) the terms “hereof,” “herein,” “hereby,” “hereto,” “herewith,”
“hereunder” and derivative or similar words refer to this entire Agreement;
(E) the terms “Section” and “Attachment” refer to the specified Section or
Attachment of this Agreement and references to “paragraphs” or “clauses” shall
be to separate paragraphs or clauses of the Section or subsection in which the
reference occurs; (F) the words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”; (G) the word “or”
shall be disjunctive but not exclusive; and (H) the word “from” (when used in
reference to a period of time) means “from and including” and the word “through”
(when used in reference to a period of time) means “through and including”;

(ii) references to any federal, state, local, or foreign statute or Law shall
(A) include all rules and regulations promulgated thereunder and (B) be to that
statute or Law as amended, modified or supplemented from time to time; and

(iii) references to any Person include references to such Person’s successors
and permitted assigns, and in the case of any Governmental Authority, to any
Person succeeding to its functions and capacities.

 

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(d) Whenever this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified. If any action is to be
taken or given on or by a particular calendar day, and such calendar day is not
a Business Day, then such action may be deferred until the next Business Day.

(e) The phrase “to the extent” shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply “if.”

(f) The terms “writing,” “written” and comparable terms refer to printing,
typing and other means of reproducing words (including electronic media) in a
visible form.

(g) All monetary figures shall be in United States dollars unless otherwise
specified.

(h) All references to “this Agreement” or any “Facility Addendum” shall include
any amendments, modifications or supplements thereto.

 

  18.12

Rules of Construction.

The language used in this Agreement shall be deemed to be the language chosen by
the Parties to express their mutual intent. The Parties acknowledge that each
Party and its attorney has reviewed and participated in the drafting of this
Agreement and that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting Party, or any similar rule operating
against the drafter of an agreement, shall not be applicable to the construction
or interpretation of this Agreement.

 

  18.13

Counterparts.

This Agreement may be executed in two (2) or more counterparts (including by
electronic or .pdf transmission), each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. Delivery of
any signature page by facsimile, electronic or .pdf transmission shall be
binding to the same extent as an original signature page.

 

  18.14

Amendments.

No provisions of this Agreement shall be deemed waived, amended, supplemented or
modified by any Party, unless such waiver, amendment, supplement or modification
is in writing and signed by the authorized representative of the Party against
whom it is sought to enforce such waiver, amendment, supplement or modification.

 

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  18.15

Entire Agreement.

This Agreement, the Separation Agreement, the other Ancillary Agreements,
including any related annexes, exhibits, schedules and attachments, as well as
any other agreements and documents referred to herein and therein, shall
together constitute the entire agreement between the Parties relating to the
transactions contemplated hereby and supersede any other agreements, whether
written or oral, that may have been made or entered into by or among any of the
Parties or any of their respective Affiliates relating to the transactions
contemplated hereby.

 

  18.16

Non-Disturbance.

Except as set forth in Section 16 and as may be otherwise expressly agreed upon
in writing between the Parties in accordance with the terms thereof, the AG and
Branded Product Supply Agreement is not assigned, amended, modified or in any
other manner affected by the provisions of this Agreement whatsoever. No
amendment to the AG and Branded Product Supply Agreement shall affect this
Agreement unless expressly incorporated herein by reference in accordance with
the terms hereof. No amendment to this Agreement shall affect the AG and Branded
Product Supply Agreement unless expressly incorporated therein by reference in
accordance with the terms thereof.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed and delivered as of the date first written above.

 

UPJOHN INC.              PFIZER INC. By:  

/s/ Sanjeev Narula

    By:  

/s/ Douglas E. Giordano

Name:  

Sanjeev Narula

    Name:  

Douglas E. Giordano

Title:  

Authorized Officer

    Title:  

Senior Vice President, Worldwide Business Development