Exhibit 10.2

Certain identified information in this document has been excluded because it is
both (i) not material and (ii) would likely cause competitive harm if publicly
disclosed. [***] indicates where such information has been omitted.

Master Manufacturing Services Agreement

Effective Date: 26 June 2019

 

PARTIES

PATHEON UK LIMITED
a company existing under the laws of the United Kingdom, with its principal
place of business at Kingfisher Drive, Swindon, SN3 5BZ, United Kingdom
("Patheon"),

- and -

SAVARA APS
a company existing under the laws of Denmark, with its principal place of
business at Slotsmarken 17, 1 th., DK-2970 Hørsholm, Denmark ("Client").

 

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

 

Table of Contents

 

1.

 

Structure of Agreement and Interpretation

4

 

 

 

 

 

 

1.1

Master Agreement

4

 

 

 

1.2

Product Agreements

4

 

 

1.3

Definitions

4

 

 

 

1.4

Interpretation

8

 

 

 

 

 

 

 

2.

 

Patheon's Manufacturing Services

9

 

 

 

 

 

 

2.1

Manufacturing Services

9

 

 

 

2.2

Subcontracting

9

 

 

 

 

 

 

 

3.

 

Client's Obligations

9

 

 

 

 

 

 

3.1

Payment

9

 

 

 

3.2

Processing Instructions

9

 

 

 

3.3

API and Components

10

 

 

 

3.4

Packaging and Artwork

11

 

 

 

 

 

 

 

4.

 

Price and Price Adjustments

11

 

 

 

 

 

 

4.1

First Year Pricing

11

 

 

 

4.2

Annual Price Adjustments

11

 

 

 

4.3

Price Adjustments at any Time

12

 

 

 

 

 

 

 

5.

 

Purchasing Product

13

 

 

 

 

 

 

5.1

Orders and Forecasts

13

 

 

 

5.2

Obsolete Stock

15

 

 

 

5.3

Storage

15

 

 

 

5.4

Invoices and Payment

15

 

 

 

5.5

Delivery and Shipping

16

 

 

 

 

 

 

 

6.

 

Product Claims and Recalls

16

 

 

 

 

 

 

6.1

Product Claims

16

 

 

 

6.2

Product Recalls and Returns

17

 

 

 

6.3

Disposition of Deficient Product

18

 

 

 

 

 

 

 

7.

 

Co-operation and Regulatory Affairs

18

 

 

 

 

 

 

7.1

Governance

18

 

 

 

7.2

Governmental Agencies

18

 

 

 

7.3

Records

18

 

 

 

7.4

Audits

18

 

 

 

7.5

Regulatory Filings

19

 

 

 

7.6

Release

20

 

 

 

7.7

Withdrawal on Completion

20

 

 

 

 

 

 

 

8.

 

Term and Termination

20

 

 

 

 

 

 

8.1

Initial Term

20

 

 

 

8.2

Termination for Cause

20

 

 

 

8.3

Obligations on Termination

21

 

 

 

8.4

Technology Transfer

22

 

 

 

 

 

 

 

9.

 

Representations, Warranties and Covenants

23

 

 

 

 

 

 

9.1

Authority

23

 

 

 

9.2

Client Warranties

23

 

 

 

9.3

Patheon Warranties

24

 

 

 

9.4

Permits

24

 

 

 

9.5

No Warranty

24

 

 

 

 

 

 

 

 

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10.

 

Liability and Remedies

24

 

 

 

 

 

 

10.1

Consequential and Other Damages

24

 

 

 

10.2

Limitation of Liability

25

 

 

 

10.3

Patheon Indemnity

26

 

 

 

10.4

Client Indemnity

26

 

 

 

10.5

Reasonable Allocation of Risk

26

 

 

 

10.6

Validation Batches

27

 

 

 

 

 

 

 

11.

 

Confidentiality

27

 

 

 

 

 

 

11.1

Confidential Information

27

 

 

 

11.2

Use of Confidential Information

27

 

 

 

11.3

Exclusions

28

 

 

 

11.4

Photographs and Recordings

28

 

 

 

11.5

Permitted Disclosure

28

 

 

 

11.6

Marking

29

 

 

 

11.7

Return of Confidential Information

29

 

 

 

11.8

Remedies

29

 

 

 

 

 

 

 

12.

 

Intellectual Property

29

 

 

 

 

 

 

12.1

Inventions

29

 

 

 

12.2

Intellectual Property

30

 

 

 

 

 

 

 

13.

 

Miscellaneous

30

 

 

 

 

 

 

13.1

Insurance

30

 

 

 

13.2

Independent Contractors

30

 

 

 

13.3

No Waiver

30

 

 

 

13.4

Assignment

31

 

 

 

13.5

Force Majeure

31

 

 

 

13.6

Additional Product and Services

31

 

 

 

13.7

Notices

32

 

 

 

13.8

Severability

32

 

 

 

13.9

Entire Agreement

32

 

 

 

13.10

Other Terms

33

 

 

 

13.11

No Third Party Benefit or Right

33

 

 

 

13.12

Execution in Counterparts

33

 

 

 

13.13

Use of Name

33

 

 

 

13.14

Taxes

33

 

 

 

13.15

Governing Law and Jurisdiction

34

 

 

 

13.16

Dispute Resolution

34

 

 

 

 

 

 

 

APPENDIX 11 – Form of Product Agreement [Intentionally omitted.]

 

 

 

 

 

APPENDIX 21 – Dispute Resolution [Intentionally omitted.]

 

 

 

 

 

APPENDIX 31 – API Yield Calculation[Intentionally omitted.]

 

 

 

 

 

APPENDIX 41 – [Intentionally omitted.]

 

 

 

 

1 

Omitted appendices to be provided to the Securities and Exchange Commission upon
request.

 

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Page 3 of 35

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With effect from the date stated at the start of this Agreement (the “Effective
Date”), the parties have agreed to the following terms:

1.

Structure of Agreement and Interpretation

1.1

Master Agreement.

This Agreement establishes the general terms and conditions under which Patheon
or any Affiliate of Patheon in the business of performing manufacturing services
may perform Manufacturing Services for Client or any Affiliate of Client. This
master form of agreement is intended to allow the parties, or any of their
Affiliates, to contract for the manufacture of Product through Patheon’s global
network of manufacturing sites by entering into specific Product Agreements
without having to re-negotiate the general terms and conditions that apply.

1.2

Product Agreements.

This Agreement is structured so that Product Agreements may be entered into by
the parties (or their Affiliates) for the manufacture of Product at any Patheon
manufacturing site. Each Product Agreement will be governed by and will
incorporate the terms and conditions of this Agreement, except to the extent
that the parties to the Product Agreement expressly modify the terms and
conditions of this Agreement in the Product Agreement. Unless otherwise agreed
by the parties, each Product Agreement will be substantially in the general
form, and contain the information referred to, in Appendix 1.

1.3

Definitions.

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

"Affiliate" means:

 

(a)

a business entity which owns, directly or indirectly, a controlling interest in
a party; or

 

(b)

a business entity which is controlled by a party, either directly or indirectly;
or

 

(c)

a business entity, the controlling interest of which is directly or indirectly
common to the majority ownership of a party;

For this definition, "control" means the lawful right to determine (by ownership
of shares or otherwise) the election of the majority of directors (or equivalent
managers) of a business entity;

"Annual Volume" means, for the purpose of the Price, Patheon’s assumed minimum
volume of Product to be manufactured in any Year as set out in the “Annual
Volume Forecast” section of Schedule A of the applicable Product Agreement;

“API” means the active materials listed in the applicable Product Agreement
(references to “Active Materials” or “Active Pharmaceutical Ingredient” in
documents forming part of this Agreement or of a Product Agreement will mean
“API”);

 

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"API Credit Value" means the value of the API for certain purposes of this
Agreement, as set out in the applicable Product Agreement;

"Applicable Laws" means: (i) for Patheon, the Laws of the jurisdiction where the
Manufacturing Site is located; and (ii) for Client and the Product, the Laws of
all jurisdictions where Product is manufactured, distributed, and marketed as
these are agreed by the parties in the Product Agreement;

"Authority" means any governmental or regulatory authority, department, body or
agency or any court, tribunal, bureau, commission or other similar body, whether
federal, state, provincial, county or municipal, with competent jurisdiction
over a party, the Manufacturing Services, or the relevant Product (or its use);

"Business Day" means a day other than a Saturday, Sunday or a day that is a
statutory holiday in Patheon’s resident jurisdiction, Client’s resident
jurisdiction, or the jurisdiction where the Manufacturing Site is located;

“Capital Equipment Agreement” means the separate agreement that the parties may
enter into that addresses the rights and responsibilities of the parties
regarding capital equipment and facility modifications that may be required to
perform the Manufacturing Services under a particular Product Agreement;

"cGMPs" means, as applicable, current good manufacturing practices as described
in:

 

(a)

Parts 210 and 211 of Title 21 of the United States' Code of Federal Regulations;

 

(b)

Commission Directive (EU) 2017/1572 (art. 2); and

 

(c)

Division 2 of Part C of the Food and Drug Regulations (Canada);

together with current final industry-accepted Health Canada, FDA and EMA
guidance documents pertaining to manufacturing and quality control practice, all
as updated, amended and revised from time to time;

“Client Intellectual Property” means Intellectual Property (i) generated,
acquired or derived by Client, or any developments thereof generated, acquired
or derived by Client, at any time separate and apart from the performance of
Manufacturing Services, or (ii) by Patheon while performing any Manufacturing
Services which Intellectual Property is specific to, or dependent upon, the
Product;

“Client-Supplied Components” means those Components supplied or to be supplied
by or on behalf of Client as identified in Schedule A of a Product Agreement;

"Components" means, collectively, all packaging components, raw materials,
ingredients, and other materials (including labels, product inserts and other
labelling for the Products) required to manufacture or package Product in
accordance with the Processing Instructions, other than the API;

“Confidential Information” has the meaning specified in Section 11.1;

 

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“DEA” means the Drug Enforcement Administration of the United States Department
of Justice;

“Deficient Product” has the meaning specified in Section 6.1(a);

“Disclosing Party” has the meaning specified in Section 11.1;

"EMA" means the European Medicines Agency;

"FDA" means the United States Food and Drug Administration;

"Firm Order" has the meaning specified in Section 5.1(d);

"Health Canada" means the department of the Canadian Government known as Health
Canada and includes, among other relevant branches, the Therapeutic Products
Directorate and the Health Products and Food Branch Inspectorate;

“Initial Product Term” has the meaning specified in Section 8.1;

"Intellectual Property" includes, without limitation, rights in patents, patent
applications, formulae, trademarks, trademark applications, trade-names,
Inventions, copyrights, industrial designs, trade secrets, and know how;

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

"Inventory" means, at a point in time, all inventories of Components and
work-in-process under Patheon’s care or control used for the manufacture or
packaging of Product;

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

“Local Currency” has the meaning specified in Appendix 4;

“Long Term Forecast” has the meaning specified in Section 5.1(a);

"Manufacturing Services" means the manufacturing, quality control, quality
assurance, stability testing, packaging, and related services, as set out in the
relevant Product Agreement, for the manufacture of Product for distribution in
the Territory;

"Manufacturing Site" means the facility identified in a Product Agreement where
the Manufacturing Services will be performed;

“Minimum Market Requirement” has the meaning specified in Section 2.1;

"Minimum Order Quantity" means, for each manufacturing campaign ordered, the
minimum number of units or batches of a Product that Client must purchase, as
set out in Schedule A of the applicable Product Agreement;

 

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“Obsolete Stock” has the meaning specified in Section 5.2(b);

“Patheon Competitor” means a business that derives greater than 50% of its
revenues from performing contract pharmaceutical or biopharmaceutical
development or commercial manufacturing services;  

“Patheon Intellectual Property” means Intellectual Property generated or derived
by Patheon or its Affiliates before performing any Manufacturing Services,
developed by Patheon while performing the Manufacturing Services, or otherwise
generated or derived by Patheon in its business which Intellectual Property is
not specific to, or dependent upon, the Product including, without limitation,
Inventions and Intellectual Property which may apply to manufacturing processes
or the formulation or development of drug products or drug delivery systems
unrelated to the specific requirements of the Product;

“Price” means the fees to be charged by Patheon for:

 

(a)

performing the Manufacturing Services;

 

(b)

the cost of Components (other than Client-Supplied Components); and

 

(c)

any separate cost items and other fees,

as set out in Schedule A of the applicable Product Agreement;

"Processing Instructions" means the agreed file, for each Product, which
contains documents relating to the Product, including, without limitation:

 

(a)

quality control testing methods for API and Components;

 

(b)

manufacturing instructions, directions, and processes;

 

(c)

any storage requirements for the API, Components, or Product;

 

(d)

all environmental, health and safety information for the Product including
material safety data sheets; and

 

(e)

the finished Product quality control testing methods, packaging instructions and
shipping requirements for the Product;

"Product" means a product listed in Schedule A of a Product Agreement;

“Product Agreement” means the agreement between Patheon and Client (or their
applicable Affiliates) substantially in the form set out in Appendix 1 under
which Patheon will perform Manufacturing Services;

“Product Claims” has the meaning specified in Section 6.1(a);  

"Quality Agreement" means a separate agreement that sets out the quality
assurance standards for the Manufacturing Services;

 

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“Recall” has the meaning specified in Section 6.2(a);

“Recipient” has the meaning specified in Section 11.1;

“Regulatory Approval” has the meaning specified in Section 7.5(a);

"Regulatory Authority" means the FDA, EMA, and Health Canada and any other
foreign regulatory agencies competent to grant marketing approvals for
pharmaceutical or biopharmaceutical products, including the Products, in the
Territory;

“Release Date” means in relation to each batch of Product the scheduled date by
which the Product will be released by Patheon’s quality department (by
confirmation or certification) as agreed in the Quality Agreement and made
available for shipment, and as confirmed by Patheon in a Firm Order;

“Representatives” means, a party’s directors, officers, employees, advisers,
agents, consultants, subcontractors, service partners or professional advisors;

“Rolling Forecast” has the meaning specified in Section 5.1(b);

"Technical Dispute" has the meaning specified in Appendix 2;

"Territory" means the geographic area described in a Product Agreement where
Product manufactured by Patheon will be distributed by or on behalf of Client;

"Third Party Rights" means the Intellectual Property of any third party;

"VAT" has the meaning specified in Section 13.14; and

"Year" means in the first year of this Agreement or a Product Agreement, the
time from the Effective Date up to and including December 31 of the same
calendar year, and after that will mean a calendar year.

1.4

Interpretation.

The division of this Agreement into Sections, Subsections, Appendices and
Schedules, and the insertion of headings, are for convenience of reference only
and will not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to a Section, Appendix or Schedule
refers to the specified Section, Appendix or Schedule to this Agreement. In this
Agreement, the term "this Agreement" and similar expressions refer to this
Agreement as a whole and not to any particular part, Section, Appendix or
Schedule of this Agreement. Except as otherwise expressly stated or unless the
context otherwise requires, all references to the singular will include the
plural and vice versa.

 

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2.

Patheon's Manufacturing Services

2.1

Manufacturing Services.

Patheon will perform the Manufacturing Services as set out in the relevant
Product Agreement for the Price and in accordance with the Quality Agreement.
Subject to the preceding sentence, Patheon will convert API and Components into
Product, and provide supportive Manufacturing Services such as quality assurance
(for example quality controls, analytical testing, and stability programs),
primary and secondary packaging, and any other related Manufacturing Services as
agreed between the parties.

Unless otherwise agreed in a Product Agreement, Patheon will manufacture [***]%
of Product offered for sale by Client or its Affiliates (the “Minimum Market
Requirement”). The Minimum Market Requirement will be automatically reduced five
Years after the effective date of a Product Agreement to [***]% of Client’s
requirements for Product in those countries in the Territory that are member
states of the European Economic Area.

2.2

Subcontracting.

Patheon may subcontract the Manufacturing Services under a Product Agreement to
any of its Affiliates, as agreed in the Product Agreement. Patheon will remain
exclusively liable to Client for any breach of this Agreement or negligence by
its Affiliates in the course of performing: (i) subcontracted Manufacturing
Services under a Product Agreement; or (ii) obligations under the Quality
Agreement.  Patheon may also arrange for non-Affiliate subcontractors to perform
specific services arising under any Product Agreement with the prior written
consent of Client (“Third Party Subcontractors”). Patheon will be liable to
Client for the failure by any Third Party Subcontractor to perform any part of
the subcontracted services.  But Patheon’s liability for Third Party
Subcontractors will remain subject to all limitations on Patheon’s liability as
set out in this Agreement. Patheon will have no liability arising from the
performance of services by Third Party Subcontractors: (i) that are chosen by
Client; (ii) that are suppliers or service providers not validated and utilized
by Patheon; or (iii) to the extent that the Third Party Subcontractor is
following the direct instructions of Client.  

3.

Client's Obligations

3.1

Payment.

Client will pay Patheon the applicable Price in accordance with Sections 4 and
5. All cost items that are not included in the Price (as specified in the
applicable Product Agreement) are subject to additional fees to be paid by
Client.

3.2

Processing Instructions.

Before the start of commercial manufacturing of Product under this Agreement,
Client will give Patheon a copy of the Processing Instructions, which must be
accompanied by the applicable API, Component and finished product specifications
(if applicable, precisely matching the specifications approved by the applicable
Regulatory Authority). If the Processing Instructions or accompanying documents
received are amended or no longer reflect those currently approved by the
Regulatory Authority, then Client will give Patheon a copy of the revised
documents (if applicable, precisely matching the revised specifications approved
by the applicable Regulatory Authority). Upon acceptance of the revised
Processing Instructions and accompanying documents, Patheon will give Client a
signed and dated receipt indicating Patheon’s acceptance. At Patheon’s request,
Client will provide evidence of the executed original documents submitted by or
on behalf of Client to the Regulatory Authority.

 

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3.3

API and Components.

 

(a)

Client will at its sole cost and expense deliver the API and any Client-Supplied
Components to the Manufacturing Site DDP (Incoterms 2010). Client’s obligation
will include obtaining the release of the API and any Client-Supplied Components
from the applicable customs agency and Regulatory Authority. Unless otherwise
agreed in writing, Client or Client’s designated broker will be the “Importer”
or “Importer of Record” (or equivalent, as understood under Applicable Laws) for
API, Client-Supplied Components, drug products and intermediates imported to the
Manufacturing Site, and Client is responsible for compliance with Applicable
Laws (and the cost of compliance) relating to that role. For API or
Client-Supplied Components which may be subject to import or export to or from
the United States, Client agrees that its vendors and carriers will comply with
applicable requirements of the U.S. Customs and Border Protection Service and
the Customs Trade Partnership Against Terrorism.

 

(b)

Unless otherwise agreed in writing between the parties, the API and any
Client-Supplied Components must be delivered by the Client to the Manufacturing
Site at least 45 days before the scheduled manufacture date for Product covered
by a Firm Order in sufficient quantity to enable Patheon to manufacture the
agreed quantities of Product. Patheon reserves the right to refuse to store any
quantity of API in excess of the amount necessary for the Firm Order, at its
sole discretion at any time. If Client fails to deliver the API or
Client-Supplied Components within the agreed time period and, making
commercially reasonable efforts, Patheon is unable to manufacture Product on the
scheduled date because of the delay, the Firm Order will be considered cancelled
by Client and Section 5.1(e) will apply. 

 

(c)

Patheon will control the unloading of API and Client-Supplied Components
arriving at the Manufacturing Site and Client will comply and ensure that its
carrier complies with all related directions of Patheon. The API and
Client-Supplied Components will be held by Patheon on behalf of Client as set
out in this Agreement. The API and Client-Supplied Components will at all times
remain the property of Client. Any API and Client-Supplied Components received
by Patheon will only be used by Patheon to perform the Manufacturing Services.

 

(d)

Client will ensure that: (i) all delivered API meets the specifications for that
API; and (ii) all shipments of API are accompanied by the required documentation
as specified in the applicable Quality Agreement.

 

(e)

If Client asks Patheon to qualify an additional supplier for the API or any
Component, the parties must agree on the scope of work to be performed by
Patheon and the additional fees to be paid by Client. For any API or any
Component, this work at a minimum will include: (i) laboratory testing to
confirm the API or Component meets existing specifications; (ii) manufacture of
an experimental batch of Product that will be placed on three months accelerated
stability; and (iii) manufacture of full-scale validation batches that will be
placed on concurrent stability (one batch may be the registration batch if
manufactured at full scale).

 

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(f)

Patheon will promptly advise Client if it encounters API or Component supply
problems, including delays or delivery of non-conforming API or Components from
a Client designated additional supplier. The parties will cooperate to reduce or
eliminate any supply problems from these additional suppliers. If supply
problems persist, Patheon may suspend the Manufacturing Services affected by the
problems until it is satisfied that the Client has resolved the problems with
its supplier or appointed an alternative supplier. Client will qualify or
certify (as appropriate) all Client designated additional suppliers on an annual
basis at its expense and will provide Patheon with copies of the relevant annual
reports. If Patheon agrees to certify or qualify a Client designated additional
supplier on behalf of Client, it will do so for an additional fee payable by
Client.

3.4

Packaging and Artwork.

Client will be responsible for the cost of artwork development and approval of
all artwork.  Client will be responsible for changes to labels, product inserts,
and other packaging for the Product, including obtaining all required approvals.
Client will be responsible for the cost of labelling obsolescence as
contemplated in Section 5.2. Patheon's name will not appear on the label or
anywhere else on the Product unless: (i) required by any Laws; or (ii) Patheon
consents in writing to the use of its name. At least 150 days prior to the
Release Date of Product for which new or modified artwork is required, Client
will provide at no cost to Patheon and in accordance with the applicable
specifications, final camera ready artwork for all packaging Components to be
used in the manufacture of the Product. Client will be responsible for the costs
associated with complying with any and all regulatory requirements for the
labeling and tracking of the manufactured Product, including product
serialisation, product data transfer and anti-counterfeiting requirements in the
Territory.

4.

Price and Price Adjustments

4.1

First Year Pricing.

The Price for each Product will be listed in Schedule A of a Product Agreement
and may be adjusted under this Section 4.

4.2

Annual Price Adjustments.

Patheon may adjust the Price effective January 1st of each Year as follows:

 

(a)

Inflation. Patheon may adjust the Price for inflation in accordance with
Appendix 4.

 

(b)

Currency Fluctuations. If the parties agree in a Product Agreement to invoice in
a currency other than the Local Currency for the Manufacturing Site, Patheon
will adjust the Price to reflect currency fluctuations. The adjustment will be
calculated in accordance with Appendix 4 after all other annual Price
adjustments under this Section 4.2 have been made.  

 

(c)

Pricing Basis. Client acknowledges that the Price in any Year is agreed based
upon the applicable Minimum Market Requirement, Annual Volume, and Minimum Order
Quantity for that Year. Patheon may adjust the Price if it reasonably concludes,
or is notified by Client, that the Minimum Market Requirement, Annual Volume or
Minimum Order Quantity will not be ordered in a Year.

 

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(d)

Tier Pricing. If the Pricing is divided into Annual Volume tiers, unless
otherwise agreed in a Product Agreement, Client will be invoiced during the Year
based at the lowest volume tier. Within 30 days after the end of each Year or on
termination of the Product Agreement, Patheon will send Client a reconciliation
of the actual volume of Product ordered by Client during the Year at the actual
applicable Pricing tiers. If the reconciliation shows an overpayment, Patheon
will issue a credit to Client for the amount of the overpayment within 60 days
after the end of the Year or will reimburse the overpayment within 60 days after
termination. The parties will work together in good faith to resolve any
disagreement over the reconciliation.

For all Price adjustments under this Section 4.2, Patheon will deliver to Client
on or about October 1 but no later than December 1 of each Year (unless
otherwise agreed in writing) a letter stating the adjusted Pricing under a
Product Agreement to be effective for Product to be delivered on or after
January 1 of the next Year including any Firm Orders accepted by Patheon before
that date. Any omitted adjustment in a Year does not waive Patheon’s right to
apply that adjustment cumulatively with the next permitted adjustment.

4.3

Price Adjustments at any Time.

The Prices may be adjusted by Patheon at any time upon written notice to Client
as follows:

 

(a)

Extraordinary Increases in Component Costs. If the cost of a Component increases
cumulatively by at least [***]% since the last annual adjustment as a result of
market factors outside of Patheon’s control, then Patheon will be entitled to
adjust the Price proportionately and as otherwise agreed in the Product
Agreement. The revised Price will become effective with the first use of the
higher cost Component in the manufacture of the Product. For a Price adjustment
under this Section 4.3(a), Patheon will deliver to Client a revised Schedule A
to the Product Agreement.

 

(b)

Changes. The scope of the Manufacturing Services is set by the agreed Processing
Instructions, the Regulatory Approvals, the Quality Agreement and any
assumptions, inclusions, exclusions and other parameters set out in the
applicable Product Agreement. Changes to the scope of the Manufacturing Services
and related changes to the Price must be agreed in writing by the parties (using
a “Change of Scope” agreement, or similar, setting out the agreed activities and
costs of implementation) and are subject to the change control provisions of the
Quality Agreement. Where Patheon requests a change to the Manufacturing
Services, the change will be implemented following written approval of Client,
which Client will not unreasonably withhold, condition or delay.

 

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5.

Purchasing Product

5.1

Orders and Forecasts.

 

(a)

Long Term Forecast.  On or before June 1 of each Year, Client will give Patheon
a non-binding written forecast of Client’s volume requirements for the Product
for each of the next [***] (“Long Term Forecast”). If Patheon foresees any
capacity constraint affecting any portion of the Long Term Forecast, it will
notify Client and the parties will agree on a revised Long Term Forecast within
Patheon’s expected capacity. If Patheon confirms it is unable to meet the
Client's Long Term Forecast (neither at the Manufacturing Site set forth in the
relevant Product Agreement nor at any other facility within the Patheon
network), then Client is free to have the Product manufactured elsewhere without
penalty, upon prior written notice thereof to Patheon.

 

(b)

Rolling Forecast.  Before each Product Agreement is executed, Client will give
Patheon a written forecast of the volume of Product that Client expects to order
in each of the next [***] (the “Rolling Forecast”). The Rolling Forecast must be
reasonably consistent with the Long Term Forecast. Client will provide an
updated Rolling Forecast: (i) on or before [***]; and (ii) if at any time it
determines that the total forecast volumes estimated in the most recent Rolling
Forecast have changed by more than [***]%. Each updated Rolling Forecast
supersedes all previous Rolling Forecasts.

 

(c)

Orders.  On or before [***], Client will issue a new purchase order for any
required Product. Each purchase order must meet the Minimum Order Quantity and
specify the purchase order number, quantities by Product type, and requested
release dates for the Product (which must occur at least 90 days after the first
day of the next month).

 

(d)

Acceptance of Purchase Orders. To the extent that a purchase order covers
Product that is forecast in the Rolling Forecast, Patheon will accept the
purchase order by sending an acknowledgement to Client, including the confirmed
Release Dates. Subject to Section 5.1(f), if Patheon fails to acknowledge
receipt of a purchase order within ten Business Days, the purchase order will be
considered accepted by Patheon. An accepted purchase order will be binding on
the parties (a “Firm Order”), except that either party may request to change any
Release Date beyond 90 days after the first day of the next month. The parties
will negotiate in good faith and agree on any requested alternative release
date. Neither party may unreasonably reject an alternative release date
requested under this Section 5.1(d), but, if the parties cannot agree, the
original Release Date confirmed by Patheon will apply.

 

(e)

Cancellation or Postponement.  Patheon will determine the manufacturing schedule
of all Product covered by Firm Orders. If Client cancels or reduces a Firm
Order, or wishes to postpone the applicable Release Date (subject to Section
5.1(d)), Client will remain liable to pay Patheon [***]% of the Price for the
Firm Order.

 

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(f)

Capacity Reservation. In advance of each Year of a Product Agreement, Patheon
will use the Rolling Forecast to reserve its manufacturing capacity in that Year
for Product as follows:

 

(i)

for the first Year, by reference to the first Rolling Forecast;

 

(ii)

for the second Year, if the Effective Date of the Product Agreement occurs after
June 1, by reference to the first Rolling Forecast; and

 

(iii)

in all other cases, by reference to the Rolling Forecast applicable at June 1 of
the previous Year,

the relevant forecast for the Year being the “Yearly Forecast Volume”.

At the end of each Year, if the aggregate actual volume of Product ordered by
Client with a confirmed Release Date within the Year, taking into account any
Product paid for but not ordered, (“Actual Yearly Volume”) is less than [***]%
of the Yearly Forecast Volume, then Patheon may invoice and Client will pay
Patheon [***]% of the Price for the shortfall of Product below the tolerance
during the Year in an amount calculated as follows:

Amount Due to Patheon=[***]

 

If the quantity of Product requested by Client in [***] (in purchase orders
received by Patheon) exceeds the [***], Patheon shall not be obliged to supply
such excess quantities, but it will use commercially reasonable efforts to
supply the additional Product volumes depending on the relevant available
capacity at the Manufacturing Sites at the time of such request. Patheon will
not be considered to have accepted any purchase order for additional Product
volumes without written confirmation.

 

(g)

Controlled Substance Quota Requirements (if applicable).  Client will give
Patheon the information set out below for obtaining any required DEA or
equivalent agency quotas (“Quota”) needed to perform the Manufacturing
Services.  Patheon will be responsible for routine management of Quota
information in accordance with Applicable Laws. The parties will cooperate to
communicate the information and to assist each other in Regulatory Authority
information requirements related to the Product as follows: (i) by April 1 of
each Year for the applicable Product, Client will provide to Patheon the next
Year’s annual Quota requirements for the Product; (ii) by August 1 of each Year,
Client will provide to Patheon any changes to the next Year’s Quota
requirements; (iii) Client will pro-actively communicate any changes to the
Quota requirements for the then-current Year in sufficient time to allow Patheon
to file and finalize Regulatory Authority filings supporting the changes; (iv)
upon Patheon receiving the necessary forecast information from Client in order
to request additional Quota, Patheon will submit to the applicable Regulatory
Authority, on a timely basis, all filings necessary to obtain Quotas for API and
will use commercially reasonable efforts to secure sufficient Quota from the
applicable Regulatory Authority so as to achieve Release Dates for Product as
set out in applicable purchase orders and forecasts submitted to Patheon by
Client or its designee; and (v) Patheon will not be responsible for any
Regulatory Authority’s refusal or failure to grant sufficient Quota for reasons
beyond the reasonable control of Patheon (including where Client fails to
provide the required information in accordance with this Section 5.1(g)).

 

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5.2

Obsolete Stock.

 

(a)

Client understands and acknowledges that Patheon will rely on purchase orders,
Firm Orders, the Long Term Forecast and the Rolling Forecast in ordering the
Components (other than Client-Supplied Components) required to meet anticipated
Firm Orders. Patheon may purchase the Components in sufficient volumes, and
reasonably in advance of the expected use of the Component (taking into account
lead times), to meet the production requirements for Products covered by
anticipated Firm Orders or to meet the production requirements of any longer
period agreed to by the parties.  

 

(b)

Client will reimburse Patheon for the cost of Components ordered by Patheon in
relation to Firm Orders or under Section (a) that are not used in the
Manufacturing Services within six months after the forecasted month for which
the purchases have been made or if the Components have expired or are rendered
obsolete due to changes in any forecast, Processing Instructions, GMP, artwork
or Applicable Laws during the period (collectively, “Obsolete Stock”). This
reimbursement will include Patheon’s cost to purchase and destroy the Obsolete
Stock (plus a [***] handling fee). If any non-expired Components are used in
Products subsequently manufactured for Client or in third party products
manufactured by Patheon, Client will receive credit for any costs of those
Components previously paid to Patheon by Client.

5.3

Storage.

If: (i) Client fails to take possession or arrange for the destruction of
Obsolete Stock within 30 days of receipt of written notice from Patheon
identifying the Obsolete Stock; (ii) any equipment (other than existing Patheon
equipment) is stored at the Manufacturing Site at any time prior to its use in
the Manufacturing Services; or (iii) Product is not collected by Client within
30 days of the Release Date notified by Patheon, Client will pay Patheon [***],
per month after that for storing the Obsolete Stock, equipment or Product.
Storage fees for Obsolete Stock or Product which contain controlled substances
or require refrigeration will be charged at [***] per month.  Storage fees are
subject to a one pallet minimum charge per month. Patheon may ship Product held
by it longer than 30 days to Client at Client’s expense on 14 days’ written
notice to Client. If Patheon is unable to store any material due to capacity
constraints, Patheon may use an Affiliate or qualified third party to store
(outside the Manufacturing Site) any material under this Agreement. After the
limited storage periods stated above, Client will assume all risk of loss or
damage to materials and Client will be responsible for having appropriate
insurance coverage in place for this risk.

5.4

Invoices and Payment.

For shipments of Product, Patheon will issue invoices to Client on or after the
Release Date of the Product. Otherwise, Patheon will issue invoices for
Manufacturing Services on completion or as agreed in the Product Agreement.
Patheon will also submit to Client, with each shipment of Product, a duplicate
copy of the invoice covering the shipment. Invoices will be sent by email to the
email address given by Client to Patheon in writing. Each invoice will, to the
extent applicable, identify Client’s Manufacturing Services purchase order
number, Product numbers, names and quantities, unit price, freight charges, and
the total amount to be paid by Client. Client will pay all invoices within 30
days of the date of the invoice.  If any portion of an invoice is disputed,
Client will pay Patheon for the undisputed amount and the parties will use good
faith efforts to reconcile the disputed amount as soon as practicable. Interest
on undisputed past due accounts will accrue at 1.5% per month.  Patheon may, on
giving 30 days’ notice to Client, suspend all Manufacturing Services, including
release and shipment of Product, until all undisputed past due invoices have
been paid in full. Patheon will have no liability to Client for losses caused by
this suspension, including without limitation, losses due to delayed Product
delivery or Product shortages.

 

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5.5

Delivery and Shipping.

Delivery of Product and any other materials will be made EXW (Incoterms 2010)
from Patheon’s Manufacturing Site unless otherwise agreed in a Product
Agreement. Subject to Section 8.3, risk of loss or of damage to Product will
remain with Patheon until Patheon loads the Product onto the carrier’s vehicle
for shipment at the shipping point at which time risk of loss or damage will
transfer to Client. But if Client fails to collect Product within one month
after it has been released for shipment by Patheon, Client will assume all risk
of loss or damage to the released Product. Patheon may, in accordance with
Client’s instructions and as agent for Client, at Client’s risk, arrange for
shipping (to Client or any third party nominated by Client) to be paid by
Client. Client will arrange for insurance and will select the freight carrier
used by Patheon to ship Product and may monitor Patheon’s shipping and freight
activity under this Agreement.

6.

Product Claims and Recalls

6.1

Product Claims.

 

(a)

Rejection. Client may reject any manufactured Product that it reasonably
considers (by reference to the results of the agreed release testing) to be
deficient based on documentation provided by Patheon or Client’s own inspection
or testing of delivered Product.

 

(b)

Product Claims.  

 

(i)

Client may claim a remedy (a “Product Claim”) for any portion of any batch of
Product for which Patheon did not perform the Manufacturing Services in
accordance with the agreed Processing Instructions, cGMPs, or Applicable Laws
(“Deficient Product”). Client will inspect Product manufactured by Patheon, or
batch documentation provided by Patheon, upon receipt and will give Patheon
written notice of all Product Claims within 30 days after receipt (or, in the
case of any deficiency not reasonably susceptible to discovery upon receipt,
within 30 days after discovery by Client, but not after the expiration date of
the Product). If Client fails to provide a Product Claim within the applicable
30 day period, then the Product will be considered to have been accepted by
Client on the 30th day. Patheon will have no liability for any deficiency for
which it has not received notice within the applicable 30 day period.

 

(ii)

Without prejudice to Section 10.3, this Section 6 sets out the only liability of
Patheon for Deficient Products. Patheon will provide a remedy for Product Claims
as specified in this Section 6 and Section 10.2, but Patheon will have no
obligation for any Product Claims to the extent the Deficient Product was caused
by: (i) deficiencies in the Processing Instructions, specifications, the safety,
efficacy, or marketability of the Product or its distribution; (ii) a defect in
the API or an incorporated Component that was not reasonably discoverable by
Patheon using the test methods set out in the Processing Instructions; (iii)
actions of Client or third parties occurring after the Product is delivered by
Patheon; (iv) packaging design or labelling defects or omissions for which
Patheon has no responsibility; (v) any unascertainable reason despite Patheon
having performed the Manufacturing Services in accordance with the Processing
Instructions, cGMPs, and Applicable Laws; or (vi) any other breach by Client of
its obligations under this Agreement. If after a full investigation as set out
in the Quality Agreement and this Section 6.1(b)(ii), it is determined that
Patheon manufactured Product in accordance with the agreed Processing
Instructions, but a batch or portion of batch of Product is not released, Client
will pay Patheon the Price for the Product. Patheon will prepare an annual
reconciliation of API as set forth in Appendix 3, and Patheon’s only liability
for API loss is set out in Appendix 3.

 

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(c)

Determination of Deficiency. Upon receipt of a Product Claim, Patheon will have
ten days to advise Client by notice in writing whether it disagrees with the
contents of the Product Claim.  If the parties fail to agree within ten days
after Patheon's notice to Client as to whether any Product identified in the
Product Claim is Deficient Product, the parties will investigate the matter in
accordance with the Quality Agreement. If, after joint testing or investigation
has been performed, the parties still cannot agree on the root cause, the
provisions of Appendix 2 will apply and, after the required negotiation, the
dispute will be handled as a Technical Dispute.

 

(d)

Shortages and Price Disputes. Claims for shortages in the amount of Product
shipped by Patheon or a Price dispute will be dealt with by reasonable agreement
of the parties. Any claim for a shortage or a Price dispute will be considered
waived by Client if it has not been presented within 30 days of the date of the
relevant invoice.

6.2

Product Recalls and Returns.

 

(a)

Records and Notice. The parties will each maintain records necessary to permit a
Recall of any Product delivered to Client or customers of Client. Each party
will promptly notify the other of any information which might affect the
marketability, safety or effectiveness of the Product or which might result in
the Recall or seizure of the Product in accordance with the Quality Agreement.
Upon receiving this notice or upon this discovery, each party will stop making
any further shipments of any Product in its possession or control until a
decision has been made whether a Recall or some other corrective action is
necessary. The decision to initiate a Recall or to take some other corrective
action, if any, will be made and implemented by Client.  "Recall" will mean any
action: (i) by Client to recover title to or possession of quantities of the
Product sold or shipped to third parties (including, without limitation, the
voluntary withdrawal of Product from the market); (ii) by any Regulatory
Authority to detain or destroy any of the Product; or (iii) by either party to
refrain from selling or shipping quantities of the Product to third parties
which would be subject to a Recall if sold or shipped.

 

(b)

Recalls. If: (i) any Regulatory Authority issues a directive, order or,
following the issuance of a safety warning or alert about a Product, a written
request that any Product be Recalled; (ii) a court of competent jurisdiction
orders a Recall; or (iii) Client determines that any Product should be Recalled
or that a "Dear Doctor" letter is required relating the restrictions on the use
of any Product, then Patheon will co-operate as reasonably required by Client,
having regard to all Applicable Laws.

 

(c)

Recalled Product. To the extent that a Recall results from, or arises from
Deficient Product, Patheon will be responsible for the reasonable documented
out-of-pocket expenses of the Recall and, at Client’s election, will as per
Section 10 either (i) use its commercially reasonable efforts to replace the
Deficient Product with replacement Products as soon as reasonably practical or
(ii) refund 100% of the Price paid for the Deficient Product. In all other
circumstances, Recalls, returns, or other corrective actions will be made at
Client's cost and expense. Patheon’s only liability for API loss is set out in
Appendix 3.

 

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6.3

Disposition of Deficient Product.

Client will not dispose of any damaged, returned, or Deficient Product for which
it intends to assert a Product Claim against Patheon without Patheon’s prior
written authorization to do so.  Patheon may instruct Client to return the
Products to Patheon. Patheon will bear the cost of return and disposition of any
Deficient Products. In all other circumstances, Client will bear the cost of
return and disposition, including all applicable fees for Manufacturing
Services.

7.

Co-operation and Regulatory Affairs

7.1

Governance.

Each party will without delay upon execution of this Agreement or a Product
Agreement appoint one of its employees to be a relationship manager responsible
for liaison between the parties. The relationship managers will meet on a
frequency agreed between the parties to review the current status of the
business relationship, including review of key performance indicators such as
API delivery, on-time delivery, right first time, and attainment of the Minimum
Market Requirement, and manage any issues that have arisen.

7.2

Governmental Agencies.

Subject to any restrictions in the Quality Agreement, each party may communicate
with any Regulatory Authority responsible for granting Regulatory Approval for
the Product and any other relevant Authority regarding the Product if, in the
opinion of that party's counsel, the communication is necessary to comply with
the terms of this Agreement or the requirements of the Authority or Applicable
Laws. Otherwise, the parties will consult each other in relation to regulatory
communications relating to the Product in accordance with the Quality Agreement.

7.3

Records.

Patheon will keep records of the manufacture, testing, and shipping of the
Product, and retain samples of the Product as are necessary to comply with
manufacturing regulatory requirements applicable to Patheon, Applicable Laws,
cGMP and the Quality Agreement. Copies of the records and samples will be
retained as and for the period specified in the Quality Agreement. Patheon
reserves the right to destroy or return to Client, at Client’s sole expense, any
document or samples for which the retention period has expired if Client fails
to arrange for destruction or return within 30 days of receipt of notice from
Patheon.  

7.4

Audits.

Subject to the limits agreed in the Quality Agreement, Patheon will give Client
reasonable access at agreed times to the areas of the Manufacturing Site in
which the Product is manufactured, stored, handled, or shipped to permit Client
to verify that the Manufacturing Services are being performed in accordance with
the Specifications, cGMPs, and Applicable Laws. If Client wishes to audit
Patheon beyond the agreed limits, except where the audit is required due to
Patheon’s material breach, Client will pay to Patheon a fee of [***] for each
additional audit day and [***] per audit day for each additional auditor. Under
no circumstances will: (a) Client have a right of access to Patheon’s financial
records; or (b) any Patheon Competitor be permitted access to the Manufacturing
Site.

 

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7.5

Regulatory Filings.

 

(a)

Regulatory Authority Documentation. Client will provide copies of all relevant
documents relating to Regulatory Authority approval for the commercial
manufacture, distribution and sale of the Product (“Regulatory Approval”) to
Patheon on request and as required under the Quality Agreement. Patheon will
review and verify the accuracy of these documents in accordance with the Quality
Agreement. Client is not entitled to submit Regulatory Approvals referring to
Patheon or its Affiliates or the Services until approved by Patheon.

 

(b)

Deficiencies.  If, in Patheon’s sole discretion, acting reasonably, Patheon
determines that any regulatory information given by Client is inaccurate or
deficient in any manner whatsoever (the "Deficiencies"), Patheon will notify
Client in writing of the Deficiencies. The parties will work together to have
the Deficiencies resolved prior to the date of filing of the relevant
application and in any event before any pre-approval inspection or before the
Product is placed on the market if a pre-approval inspection is not performed.

 

(c)

Inspection by Regulatory Authorities.  If Client does not give Patheon the
documents requested under this Section 7.5 or the Quality Agreement within the
time specified and if Patheon reasonably believes that Patheon’s standing with a
Regulatory Authority may be jeopardized, Patheon may, in its sole discretion,
delay or postpone any inspection by the Regulatory Authority until Patheon has
reviewed the requested documents and is satisfied with their contents. Client’s
breach of this requirement will be considered a material breach of this
Agreement.

 

(d)

Pharmacovigilance. Client will be responsible, at its expense, for all
pharmacovigilance obligations for the Product in accordance with Applicable Laws
and the monitoring and management of post-marketing complaints and queries at
its cost (including, without limitation, the cost of assistance required of
Patheon under the Quality Agreement).  Unless required by Applicable Law,
neither party will be obliged to exchange with the other party any information
or data which it compiles in carrying out pharmacovigilance obligations or
activities.

 

(e)

No Patheon Responsibility.  Except as otherwise agreed in the Quality Agreement,
Patheon will not assume any responsibility for: (a) the submission, accuracy or
cost of any application for Regulatory Approval or related documentation (or the
success of those applications); (b) any activity that is required by Applicable
Laws for Regulatory Approval (including pharmacovigilance and complaints
handling, and preparation and submission of any regular quality or other
update); or (c) any dealings with the relevant Regulatory Authority on behalf of
Client for Regulatory Approval. If a Regulatory Authority, or other governmental
body, requires Patheon to incur fees, costs or activities in relation to the
Products which Patheon considers unexpected and extraordinary, then Patheon will
notify Client in writing and the parties will discuss in good faith appropriate
mutually acceptable actions, including fee/cost sharing, or termination of all
or any part of this Agreement or a Product Agreement.  Patheon will be not be
obliged to undertake these activities or to pay for the fees or costs until the
parties reach agreement on scope and fees for Patheon’s assistance.

 

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7.6

Release.

The parties agree that the release of the Products for sale or distribution
under the applicable marketing approval for the Product will not by itself
indicate compliance by Patheon with its obligations relating to the
Manufacturing Services. Nothing in this Agreement will remove or limit the
authority of the relevant quality function (as specified by the Quality
Agreement) to determine whether the Product will be released for sale or
distribution.

7.7

Withdrawal on Completion.

No later than 90 days following completion or permanent cessation of the
Manufacturing Services at the applicable Manufacturing Site, Client will: (a)
ensure that any regulatory filings relating to the Product are withdrawn or
amended to remove all references to the Manufacturing Site and, as applicable,
Patheon or its Affiliates and their facilities (except in an historic context);
and (b) provide to Patheon written confirmation of its compliance with this
Section 7.7. If this time is not sufficient to meet the requirements of certain
Regulatory Authorities, despite Client’s best efforts, then Patheon may agree to
extend the period based on the written reassurances of Client.

8.

Term and Termination

8.1

Initial Term.

This Agreement will become effective as of the Effective Date and will continue
until December 31 of the fifth Year of the Agreement (the "Initial Term"),
unless terminated earlier by one of the parties. This Agreement will
automatically renew after the Initial Term for successive terms of two Years
each if there is a Product Agreement in effect, unless Client gives written
notice of its intention to terminate this Agreement at least 12 months prior to
the end of the then current term or Patheon gives written notice to Client of
its intention to terminate this Agreement at least 24 months prior to the end of
the then current term. In any event, the legal terms and conditions of this
Agreement will continue to govern any Product Agreement in effect. Each Product
Agreement will have an initial term from the Effective Date of the Product
Agreement until December 31 of the Year agreed to by the parties in the Product
Agreement (each, an “Initial Product Term”). Unless otherwise agreed in a
Product Agreement, Product Agreements will automatically renew after the Initial
Product Term for successive terms of two Years each unless Client gives written
notice of its intention to terminate the Product Agreement at least 18 months
prior to the end of the then current term or Patheon gives written notice to
Client of its intention to terminate the Product Agreement at least 18 months
prior to the end of the then current term.  

8.2

Termination for Cause.

 

(a)

Either party may terminate this Agreement or a Product Agreement upon written
notice where the other party has failed to remedy a material breach of this
Agreement or the Product Agreement within 60 days (the "Remediation Period")
following receipt of a written notice of the breach from the aggrieved party
that expressly states that it is a notice under this Section 8.2(a) (a "Breach
Notice"). The aggrieved party's right to provide notice of termination of this
Agreement or a Product Agreement under this Section 8.2(a) may only be exercised
for a period of 90 days following the expiry of the Remediation Period (where
the breach has not been remedied) and if the termination right is not exercised
during this period then the aggrieved party will be considered to have waived
the breach described in the Breach Notice. The right to terminate a Product
Agreement under this Section 8.2(a) does not extend to any other Product
Agreements where there has been no material breach of those other Product
Agreements.

 

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(b)

Either party may immediately terminate this Agreement or a Product Agreement
upon written notice to the other party if: (i) the other party is declared
insolvent or bankrupt by a court of competent jurisdiction; (ii) a voluntary
petition of bankruptcy or insolvency is filed in any court of competent
jurisdiction by the other party; or (iii) this Agreement or a Product Agreement
is assigned by the other party for the benefit of creditors.

 

(c)

Client may terminate a Product Agreement upon 30 days' prior written notice if
any Authority takes any action, or raises any objection, that permanently
prevents Client from selling the Product in the Territory.

 

(d)

Client may terminate a Product Agreement upon six months' prior written notice
if it intends to no longer order Manufacturing Services for a Product due to the
Product's discontinuance in the market.

 

(e)

Patheon may terminate this Agreement or any Product Agreement upon six months'
prior written notice if Client assigns under Section 13.4 any of its rights
under this Agreement or a Product Agreement to an assignee that, in the
reasonable opinion of Patheon acting in good faith, is: (i) unlikely to be able
to meet the financial obligations of this Agreement or a Product Agreement; (ii)
a Patheon Competitor; or (iii) an entity with whom Patheon has had prior
unsatisfactory business relations (as supported by reasonable evidence of late
or unpaid invoices or material disputes).

 

(f)

Patheon may terminate this Agreement or any Product Agreement if payment in full
of overdue, undisputed invoices is not received within 30 days following the
date of suspension of Manufacturing Services by Patheon under Section 5.4.

 

(g)

If Client forecasts zero volume for six successive months during the term of a
Product Agreement (excluding the registration period), then Patheon may
terminate the Product Agreement by providing 30 days prior written notice to
Client. Within that period, Client may either: (i) withdraw the zero forecast
and re-submit a reasonable volume forecast, after which Patheon will withdraw
the termination notice; or (ii) negotiate other terms and conditions on which
the Product Agreement will remain in effect.

8.3

Obligations on Termination.

If a Product Agreement is completed, expires, or is terminated in whole or in
part for any reason, then:

 

(a)

Client will take delivery of and pay for all undelivered Products that are
manufactured or packaged in accordance with this Agreement under a Firm Order,
at the Price in effect at the time the Firm Order was released;

 

(b)

Client will purchase all Inventory that was purchased (or will be purchased
under existing unfulfilled orders for Components), maintained or produced by
Patheon in contemplation of filling Firm Orders or in accordance with Section
5.2, at Patheon's cost (including all costs incurred by Patheon for the
purchase, handling, and processing of the Inventory);

 

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(c)

Client, at its own expense, will remove from the Manufacturing Site, within 30
days following the completion, termination, or expiration of the Product
Agreement, all unused API and Client-Supplied Components, all applicable
Inventory (whether current or obsolete), supplies, undelivered Product,
chattels, equipment or other moveable property owned by Client, related to the
Agreement and located at the Manufacturing Site or that is otherwise under
Patheon’s care and control (“Client Property”).  If Client fails to remove
Client Property within the 30 day period, Client will pay Patheon [***] per
pallet, per month, one pallet minimum (except that Client will pay [***] per
pallet, per month, one pallet minimum, for any of Client Property that contains
controlled substances, requires refrigeration or other special storage
requirements) after that for storing Client Property and will assume any third
party storage charges invoiced to Patheon regarding Client Property (which
Patheon may incur at its discretion). Patheon may ship Client Property to Client
or to an external warehouse at Client’s risk and expense. Patheon will invoice
Client for these storage charges as set out in Section 5.3 of this Agreement. If
Client fails to remove Client Property within 30 days following the completion,
termination, or expiration of the Product Agreement, Client will assume all risk
of loss or damage to the stored Client Property and it will be Client’s
responsibility to have appropriate insurance coverage in place for this risk. If
Client asks Patheon to destroy any Client Property, Client will be responsible
for the cost of destruction; and

 

(d)

any completion, termination or expiration of this Agreement or a Product
Agreement will not affect any prior outstanding obligations or payments due nor
will it prejudice any other remedies that the parties may have under this
Agreement or a Product Agreement or any related Capital Equipment Agreement.
Completion, termination or expiration of this Agreement or of a Product
Agreement for any reason will not affect the obligations and responsibilities of
the parties under Sections 5.1(e), 5.1(f), 5.4, 5.5, 8.3, 10, 11, 12, 13.14,
13.15 and 13.16, all of which survive any completion, termination or expiration,
as well as any other provisions that are by implication or otherwise intended to
survive any completion, termination or expiration. Where Patheon has agreed to
provide stability services beyond the final supply of Product, the relevant
provisions of this Agreement will survive for the agreed duration of those
stability services.

8.4

Technology Transfer.

Following termination of a Product Agreement for any reason, or at Client’s
request within six months before the end of the term of the Product Agreement,
Patheon will provide assistance to transfer part or all of Client’s
manufacturing process, know-how and analytical testing methodology for the
Product to Client (“Technology Transfer”) to assist Client to manufacture the
Product.  Patheon will also disclose to Client any Patheon Intellectual Property
that is reasonably required to manufacture the Product.  Patheon will, upon
request of Client, prepare a written proposal to perform the Technology
Transfer.  Client will pay the agreed fees for the Technology Transfer performed
by Patheon.  

 

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9.

Representations, Warranties and Covenants

9.1

Authority.

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

9.2

Client Warranties.

 

(a)

Non-Infringement. Client covenants, represents, and warrants that:

 

(i)

the Processing Instructions and specifications for the Product are its or its
Affiliate's property and that Client may lawfully disclose the Processing
Instructions and specifications to Patheon for use in accordance with this
Agreement;

 

(ii)

any Client Intellectual Property used by Patheon in performing the Manufacturing
Services (A) is Client’s or its Affiliate's unencumbered property, (B) may be
lawfully used as directed by Client and agreed in this Agreement, and (C) does
not infringe and will not infringe any Third Party Rights;

 

(iii)

the performance of the Manufacturing Services by Patheon or the use or other
disposition of any Product by Patheon as may be required to perform its
obligations under this Agreement or any Product Agreement does not and will not
infringe any Third Party Rights; and

 

(iv)

there are no actions or other legal proceedings involving Client or its
Affiliates that concerns the infringement of Third Party Rights related to any
of the Processing Instructions or specifications, or any of the API or
Client-Supplied Components, or the sale, use, or other disposition of Product
made in accordance with the Processing Instructions.

 

(b)

Quality and Compliance. Client covenants, represents, and warrants that:

 

(i)

the Processing Instructions and specifications for the Product conforms to all
applicable cGMPs and Applicable Laws;

 

(ii)

the Product, if labelled and manufactured in accordance with the Processing
Instructions and in compliance with applicable cGMPs and Applicable Laws (i) may
be lawfully sold and distributed in every jurisdiction in which Client markets
the Product, (ii) will be fit for the purpose intended, and (iii) will be safe
for human consumption; and

 

(iii)

on receipt by Patheon, the API will conform to the specifications for the API
that Client has given to Patheon and that the API will be adequately contained,
packaged, and labelled in accordance with Applicable Laws and will conform to
the affirmations of fact on the container.

 

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9.3

Patheon Warranties.

Patheon covenants, represents, and warrants that:

 

(a)

it will perform the Manufacturing Services in accordance with the Processing
Instructions, cGMPs, and Applicable Laws;

 

(b)

any Patheon Intellectual Property used by Patheon to perform the Manufacturing
Services (i) is Patheon’s or its Affiliate's unencumbered property, (ii) may be
lawfully used by Patheon, and (iii) does not infringe and will not infringe any
Third Party Rights;

 

(c)

it will not in the performance of its obligations under this Agreement use the
services of any person it knows is debarred or suspended under 21 U.S.C. §335(a)
or (b); and

 

(d)

it does not currently have, and it will not hire, as an officer or an employee
any person whom it knows has been convicted of a felony under the laws of the
United States for conduct relating to the regulation of any drug product under
the United States Federal Food, Drug, and Cosmetic Act.

9.4

Permits.

 

(a)

Client will be solely responsible for obtaining or maintaining, on a timely
basis, any permits or other regulatory approvals for the Product, Processing
Instructions or specifications, including, without limitation, all marketing and
post-marketing approvals, and any specific approvals referred to in the Quality
Agreement.

 

(b)

Patheon will maintain at all relevant times when performing the Manufacturing
Services all required governmental permits, licenses, approval, and authorities.

9.5

No Warranty.

Patheon makes no warranty or condition of any kind, either expressed or implied,
by fact or law, other than those expressly set out in this Agreement.  Patheon
makes no warranty or condition of fitness for a particular purpose nor any
warranty or condition of merchantability for the product.

10.

Liability and Remedies

10.1

Consequential and Other Damages.

Except with respect to [***], under no circumstances whatsoever will either
party be liable to the other in contract, tort, negligence, indemnity, breach of
statutory duty, or otherwise for: (i) any (direct or indirect) delay, penalty,
loss of profits, of anticipated savings, of business, of goodwill, or of use of
the Product or costs of any substitute services; or (ii) any reliance damages,
including but not limited to costs or expenditures incurred to evaluate the
viability of entering into this Agreement or to prepare for performance under
this Agreement; or (iii) for any other liability, damage, costs, penalty, or
expense of any kind incurred by the other party of an indirect or consequential
nature, regardless of any notice of the possibility of these damages.

 

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10.2

Limitation of Liability.

 

(a)

Remedies for Deficient Product. If Client makes a Product Claim under Section
6.1 and the parties agree the Product is Deficient Product, or the Product is
determined to be Deficient Product under Section 6, Patheon will promptly, at
Client’s election, either:

 

(i)

replace the Product at Patheon’s cost (after which Patheon may invoice for the
replacement) if Patheon is able to manufacture the replacement Product at the
Manufacturing Site and contingent upon the receipt from Client of all API and
Client-Supplied Components required for the manufacture of the replacement
Product; or

 

(ii)

refund 100% of the Price paid for the Deficient Product (by credit or offset
against other amounts due to Patheon under the Product Agreement).

Except for the indemnity set out in Section 10.3 and any claim for expenses
related to a Recall under Section 6.2(c), the remedies described in this Section
10.2 will be Client’s sole remedy in contract, tort, negligence, equity or
otherwise, for Deficient Product.

 

(b)

API.  Except as expressly set out in Appendix 3, under no circumstances
whatsoever will Patheon be liable to Client in contract, tort, negligence,
indemnity, breach of statutory duty, or otherwise for any loss or damage to the
API. Patheon’s maximum aggregate liability for loss of or damage to the API will
not exceed on a per Product basis [***]% of revenues (being payments of the
Price) received by Patheon for that Product under the applicable Product
Agreement during the previous Year (or, in the case of the first Year, the
expected revenue for that Product if the agreed Yearly Forecast Volumes were
ordered).  

 

(c)

Maximum Liability. Except with respect to a breach of the obligations of Section
11 or Section 12 , in any Year, in addition to the specific remedies under
Section 10.2(a) for Deficient Product and for any Recall, Patheon’s maximum
aggregate liability to Client under or in connection with this Agreement or any
Product Agreement (however arising, including contract, tort, negligence,
indemnity, breach of statutory duty, losses of API, or otherwise) will not
exceed on a per Product basis [***]% of revenues (being payments of the Price)
received by Patheon for that Product under the applicable Product Agreement
during the previous Year (or, in the case of the first Year, the expected
revenue for that Product if the agreed Yearly Forecast Volumes were ordered),
unless otherwise agreed in the relevant Product Agreement. Notwithstanding the
foregoing, the said maximum aggregate liability will not apply in the event of
Patheon’s recklessness or wilful misconduct.

 

(d)

Death, Personal Injury and Fraudulent Misrepresentation. Nothing contained in
this Agreement will act to exclude or limit either party’s liability for
personal injury or death caused by the negligence of either party or fraudulent
misrepresentation.

 

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10.3

Patheon Indemnity.

 

(a)

Patheon agrees to defend and indemnify Client, its officers and employees,
against all losses, damages, costs, claims, demands, subpoenas, judgments and
liability to, from and in favour of third parties (other than Affiliates) for
any claim (i) of infringement of any Third Party Rights solely and specifically
related to the use of the Patheon Intellectual Property, (ii) of personal injury
or property damage to the extent that the injury or damage is the result of a
failure by Patheon, its officers, employees, or Affiliates to perform the
Manufacturing Services in accordance with the Processing Instructions, cGMPs,
and Applicable Laws, or is the result of the negligence or wilful misconduct of
Patheon, its officers, employees or Affiliates, except to the extent that the
losses, damages, costs, claims, demands, subpoenas, judgments, and liability are
due to the negligence or wrongful acts of Client, its officers, employees, or
Affiliates.

 

(b)

If a claim occurs, Client will: (i) promptly notify Patheon of the claim; (ii)
use commercially reasonable efforts to mitigate the effects of the claim; (iii)
reasonably cooperate with Patheon in the defense of the claim; and (iv) permit
Patheon to control the defense and settlement of the claim, all at Patheon's
cost and expense.

10.4

Client Indemnity.

 

(a)

Client agrees to defend and indemnify Patheon, its officers and employees,
against all losses, damages, costs, claims, demands, subpoenas, judgments and
liability to, from and in favour of third parties (other than Affiliates) for
(i) any claim of infringement of any Third Party Rights in the Products or that
relates to the manufacture of the Product by a proprietary process disclosed by
Client or to Patheon’s use of Client’s Intellectual Property to perform the
Manufacturing Services, or any portion of them, or (ii) any claim of personal
injury or property damage to the extent that the injury or damage arises other
than from a breach of this Agreement or the relevant Product Agreement by
Patheon , including, without limitation, any representation or warranty
contained in this Agreement, or is the result of negligence or wilful misconduct
of Patheon, its officers, employees or Affiliates, except to the extent that the
losses, damages, costs, claims, demands, subpoenas, judgments, and liability are
due to the negligence or wrongful acts of Patheon, its officers, employees, or
Affiliates.

 

(b)

If a claim occurs, Patheon will: (i) promptly notify Client of the claim; (ii)
use commercially reasonable efforts to mitigate the effects of the claim; (iii)
reasonably cooperate with Client in the defense of the claim; and (iv) permit
Client to control the defense and settlement of the claim, all at Client's cost
and expense.

10.5

Reasonable Allocation of Risk.

This Agreement (including, without limitation, this Section 10) is reasonable
and creates a reasonable allocation of risk for the relative profits the parties
each expect to derive from the Product.  Patheon assumes only a limited degree
of risk arising from the manufacture, distribution, and use of the Product
because Client has developed and holds the marketing approval for the Product,
Client requires Patheon to manufacture and label the Product strictly in
accordance with the Processing Instructions, and Client, not Patheon, is best
positioned to inform and advise potential users about the circumstances and
manner of use of the Product.  

 

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10.6

Validation Batches.

Where Product is manufactured by Patheon (or any of its Affiliates) under a
separate pharmaceutical development or technology transfer agreement (the
“Development Agreement”) and then released by Patheon for commercial sale or
distribution by Client, the performance of the applicable pharmaceutical
development or technology transfer services including the manufacture of the
Product will be governed by the terms of the Development Agreement and will not
be subject to the terms and conditions of this Agreement. The terms of this
Agreement and the applicable Product Agreement will apply to any Product after
release by Patheon.

11.

Confidentiality

11.1

Confidential Information.

“Confidential Information” means any information disclosed by the Disclosing
Party to the Recipient (whether disclosed in oral, written, electronic or visual
form) that is non-public, confidential or proprietary including, without
limitation, information relating to the Disclosing Party’s patent and trademark
applications, process designs, process models, drawings, plans, designs, data,
databases and extracts therefrom, formulae, methods, know-how and other
intellectual property, its clients and its clients’ confidential information,
finances, marketing, products and processes and all price quotations,
manufacturing or professional services proposals, information relating to
composition, proprietary technology, and all other information relating to
manufacturing capabilities and operations. In addition, all analyses,
compilations, studies, reports or other documents prepared by any party's
Representatives containing Confidential Information will be considered
Confidential Information. Samples or materials provided under this Agreement as
well as any and all information derived from the approved analysis of the
samples or materials will also constitute Confidential Information. A party’s
rights and obligations under this Section 11 will apply to any Confidential
Information that is disclosed by or received by that party’s Representatives.
For the purposes of this Section 11, a party receiving Confidential Information
under this Agreement (including through its Representatives) is a “Recipient”,
and a party disclosing Confidential Information under this Agreement (including
through its Representatives) is the “Disclosing Party”. The existence, parties
to, and terms of this Agreement or of any Product Agreement will be considered
Confidential Information.

11.2

Use of Confidential Information.

The Recipient will use the Confidential Information solely for the purpose of
meeting its obligations under this Agreement. The Recipient will keep the
Confidential Information strictly confidential and will not disclose the
Confidential Information in any manner whatsoever, in whole or in part, other
than to those of its Representatives who (i) have a need to know the
Confidential Information for the purpose of this Agreement; (ii) have been
advised of the confidential nature of the Confidential Information and (iii)
have obligations of confidentiality and non-use to the Recipient no less
restrictive than those of this Agreement.  Recipient will protect the
Confidential Information disclosed to it by using reasonable precautions to
prevent the unauthorized disclosure, dissemination or use of the Confidential
Information, which precautions will not be less than those exercised by
Recipient for its own confidential or proprietary Confidential Information of a
similar nature.

 

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11.3

Exclusions.

The obligations of confidentiality in this Section 11 will not apply to the
extent that Confidential Information:  

 

(a)

is or becomes publicly known through no breach of this Agreement or fault of the
Recipient or its Representatives;

 

(b)

is in the Recipient's possession at the time of disclosure by the Disclosing
Party other than as a result of the Recipient's breach of any legal obligation;

 

(c)

is or becomes known to the Recipient on a non-confidential basis through
disclosure by sources, other than the Disclosing Party, having the legal right
to disclose the Confidential Information, if the other source is not known by
the Recipient to be bound by any obligations (contractual, legal, fiduciary, or
otherwise) of confidentiality to the Disclosing Party for the Confidential
Information;

 

(d)

is independently developed by the Recipient without use of or reference to the
Disclosing Party's Confidential Information as evidenced by Recipient’s written
records; or

 

(e)

is expressly authorized for release by the written authorization of the
Disclosing Party.

Any combination of information which comprises part of the Confidential
Information is not exempt from the obligations of confidentiality merely because
individual parts of that Confidential Information are covered by exceptions in
this Section 11.3, unless the combination itself is covered by any of those
exceptions.

11.4

Photographs and Recordings.

Neither party will take any photographs or videos of the other party’s
facilities, equipment or processes, nor use any other audio or visual recording
equipment (such as camera phones) while at the other party’s facilities, without
that party’s express written consent.

11.5

Permitted Disclosure.

Notwithstanding any other provision of this Agreement, the Recipient may
disclose Confidential Information of the Disclosing Party to the extent
required, as advised by counsel, in response to a valid order of a court or
other governmental body or as required by law, regulation or stock exchange
rule. But the Recipient will advise the Disclosing Party in advance of the
disclosure and limit the required disclosure to the extent practicable and
permissible by the order, law, regulation or stock exchange rule and any other
applicable law, will reasonably cooperate with the Disclosing Party, if
required, in seeking an appropriate protective order or other remedy, and will
otherwise continue to perform its obligations of confidentiality set out in this
Agreement. If any public disclosure is required by law, the parties will consult
concerning the form of announcement prior to the public disclosure being made.

 

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11.6

Marking.

The Disclosing Party will use reasonable efforts to summarize in writing the
content of any oral disclosure or other non-tangible disclosure of Confidential
Information within 30 days of the disclosure, but failure to provide this
summary will not affect the nature of the Confidential Information disclosed if
the Confidential Information was identified as confidential or proprietary when
disclosed orally or in any other non-tangible form or is of a nature reasonably
understood to be confidential or proprietary.

11.7

Return of Confidential Information.

Upon the written request of the Disclosing Party, the Recipient will promptly
return the Confidential Information to the Disclosing Party or, if the
Disclosing Party directs, destroy all Confidential Information disclosed in or
reduced to tangible form including any copies, summaries, compilations, analyses
or other notes derived from the Confidential Information except for one copy
which may be maintained by the Recipient for its records. The retained copy will
remain subject to all confidentiality provisions contained in this Agreement.
Client will not unreasonably require the return of Confidential Information that
is necessary or useful to perform the Manufacturing Services.

11.8

Remedies.

The parties acknowledge that monetary damages may not be sufficient to remedy a
breach by either party of this Section 11 and agree that the non-breaching party
will be entitled to seek specific performance, injunctive or other equitable
relief to prevent breaches of this Section 11 and to specifically enforce
Section 11 in addition to any other remedies available at law or in equity.
These remedies will not be the exclusive remedies for breach of this Section 11
but will be in addition to any and all other remedies available at law or in
equity.

12.

Intellectual Property

12.1

Inventions.

 

(a)

For the term of this Agreement, Client grants to Patheon a non-exclusive,
paid-up, royalty-free, non-transferable license of Client’s Intellectual
Property which Patheon must use in order to perform the Manufacturing Services.

 

(b)

All Client Intellectual Property will be the exclusive property of Client.

 

(c)

All Patheon Intellectual Property will be the exclusive property of Patheon.
Unless Patheon identifies in advance any specific Patheon Intellectual Property
that will be subject to a separate licensing agreement between the parties,
Patheon grants to Client a non-exclusive, perpetual, paid-up, royalty-free,
transferable license of the Patheon Intellectual Property used by Patheon in the
manufacture of the Product for use in relation to manufacturing that Product
only.

 

(d)

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

 

(e)

Either party will give the other party written notice, as promptly as
practicable, of all Inventions which can reasonably be considered to be
improvements or other modifications of the Product, processes or technology
owned or otherwise controlled by the party.  

 

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12.2

Intellectual Property.

Neither party has, nor will it acquire, any interest in any of the other party’s
Intellectual Property unless otherwise expressly agreed to in writing. Neither
party will use any Intellectual Property of the other party, except as
specifically authorized by the other party or as required for the performance of
its obligations under this Agreement.

13.

Miscellaneous

13.1

Insurance.

Each party will maintain commercial general liability insurance, including
blanket contractual liability insurance covering the obligations of that party
under this Agreement through the term of this Agreement and for a period of
three years after that. This insurance will have policy limits of not less than:
(i) EURO 5,000,000/USD 5,000,000 for each occurrence for personal injury or
property damage liability; and (ii) EURO 5,000,000/USD 5,000,000 in the
aggregate per annum for product and completed operations liability.  If
requested each party will give the other a certificate of insurance evidencing
the above and showing the name of the issuing company, the policy number, the
effective date, the expiration date, and the limits of liability. The insurance
certificate will further provide for a minimum of 30 days' written notice to the
insured of a cancellation of, or material change in, the insurance. If a party
is unable to maintain the insurance policies required under this Agreement
through no fault of its own, then the party will without delay notify the other
party in writing and the parties will in good faith negotiate appropriate
amendments to the insurance provision of this Agreement in order to provide
adequate assurances.

13.2

Independent Contractors.

The parties are independent contractors and this Agreement and any Product
Agreement does not create between the parties any other relationship such as, by
way of example only, that of employer and employee, principal and agent,
joint-venturers, co-partners, or any similar relationship, the existence of
which is expressly denied by the parties.

13.3

No Waiver.

Neither party's failure to require the other party to comply with any provision
of this Agreement or any Product Agreement will be considered a waiver of the
provision or any other provision of this Agreement or any Product Agreement,
with the exception of Sections 6.1 and 8.2 of this Agreement.

 

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13.4

Assignment.

 

(a)

Patheon may not assign this Agreement or any Product Agreement or any of its
associated rights or obligations without the written consent of Client, this
consent not to be unreasonably withheld.

 

(b)

Subject to Section 8.2(e), Client may assign this Agreement or any Product
Agreement or any of its associated rights or obligations without approval from
Patheon. But Client will give Patheon prior written notice of any assignment,
any assignee will covenant in writing with Patheon to be bound by the terms of
this Agreement or the Product Agreement, and Client will remain liable under
this Agreement. Any partial assignment will be subject to Patheon’s cost review
of the assigned Product and Patheon may terminate this Agreement or any Product
Agreement or any assigned part of them, on 12 months’ prior written notice to
Client and the assignee if good faith discussions do not lead to agreement on
amended Manufacturing Service fees within a reasonable time. Client will
reimburse Patheon for any costs incurred by Patheon in connection with the
partial assignment including any expenses incurred by Patheon for any due
diligence audits in connection with the partial assignment.

 

(c)

Despite the preceding provisions of this Section 13.4, either party may assign
this Agreement or any Product Agreement to any of its Affiliates or to a
successor to or purchaser of all or substantially all of its business to which
this Agreement relates, but the assignee must execute an agreement with the
non-assigning party whereby it agrees to be bound by the obligations of this
Agreement owed to that party.

13.5

Force Majeure.

Neither party will be liable for the failure to perform its obligations under
this Agreement or any Product Agreement if the failure is caused by an event
beyond that party's reasonable control, including, but not limited to, strikes
or other labor disturbances, lockouts, riots, quarantines, communicable disease
outbreaks, wars, acts of terrorism, cyber-attacks, fires, floods, storms,
interruption of or delay in transportation, defective equipment, lack of or
inability to obtain fuel, power or components, or compliance with any order,
regulation, or enforcement decision of any government entity (a "Force Majeure
Event").  A party claiming a right to excused performance under this
Section 13.5 will immediately notify the other party in writing of the extent of
its inability to perform, which notice will specify the event beyond its
reasonable control that prevents the performance. Neither party will be entitled
to rely on a Force Majeure Event to relieve it from an obligation to pay money
(including any interest for delayed payment) which would otherwise be due and
payable under this Agreement or any Product Agreement.

13.6

Additional Product and Services.

Additional Product may be added to, or existing Product deleted from, any
Product Agreement by amendment to the Product Agreement including its Schedules
as applicable. If Client requests services other than those expressly set out in
this Agreement or in any Product Agreement (such as qualification of a new
packaging configuration or shipping studies, or validation of alternative batch
sizes), or any cost items that are specifically excluded from the Price, Patheon
will provide a written quote of the fee for the additional services and Client
will advise Patheon whether it wishes to have the additional services performed
by Patheon. The scope of work and fees will be agreed in writing by the parties.

 

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13.7

Notices.

Unless otherwise agreed in a Product Agreement, any notice, approval,
instruction or other written communication required or permitted under this
Agreement will be sufficient if made or given to the other party by personal
delivery or confirmed receipt email or by sending the same by first class mail,
postage prepaid to the respective addresses or email addresses set out below:

If to Client:

 

Savara ApS

c/o Savara Inc.

6838 Bee Cave Road, Building III, Suite 200

Austin, Texas 78746 USA

Attention:  Chief Financial Officer

Email address: dave.lowrance@savarapharma.com

 

If to Patheon:

 

Patheon UK Limited

Kingfisher Drive, Swindon, SN3 5NZ, United Kingdom

Attention:  Legal Director

Email address: EULegalServices@Patheon.com

 

or to any other addresses or email addresses given to the other party in
accordance with the terms of this Section 13.7. Notices or written
communications made or given by personal delivery, or email will be considered
to have been sufficiently made or given when sent (receipt acknowledged), or if
mailed, five days after being deposited in the United States, Canada, or
European Union mail, postage prepaid or upon receipt (supported by reasonable
written evidence), whichever is sooner.

13.8

Severability.

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

13.9

Entire Agreement.

This Agreement, together with its Appendices, the applicable Product Agreement,
Capital Equipment Agreement (if any), and the Quality Agreement, constitutes the
full, complete, final and integrated agreement between the parties relating to
the subject matter of the Agreement and supersedes all previous written or oral
negotiations, commitments, representations, agreements, transactions, or
understandings concerning the subject matter of this Agreement. The basis of the
parties’ agreement is set out expressly and they have not been induced by or
relied on any statement or representation that is not set out in this Agreement.
Any modification, amendment, or supplement to this Agreement or any Product
Agreement must be in writing and signed by authorized representatives of both
parties. In case of conflict, the prevailing order of documents will be this
Agreement, the Product Agreement, and the Quality Agreement (except that the
Quality Agreement will prevail in relation to quality matters).  

 

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13.10

Other Terms.

No terms, provisions or conditions of any purchase order or other business form
or written authorization used by the parties will have any effect on the rights,
duties, or obligations of the parties under or otherwise modify this Agreement
or any Product Agreement, regardless of any failure of a party to object to the
terms, provisions, or conditions unless the document specifically refers to this
Agreement or the applicable Product Agreement and is signed by both parties.

13.11

No Third Party Benefit or Right.

Nothing in this Agreement or any Product Agreement will confer or be construed
as conferring on any third party any benefit or the right to enforce any express
or implied term of this Agreement or any Product Agreement (except that Patheon
Affiliates acting as subcontractors under this Agreement may enforce Sections
10.1 and 10.2). The rights of the parties to terminate, rescind or agree any
variation, waiver or settlement under this Agreement are not subject to the
consent of any other person.

13.12

Execution in Counterparts.

This Agreement and any Product Agreement may be executed in two or more
counterparts, by original or electronic (including “pdf”) signature, each of
which will be considered an original, but all of which together will constitute
one and the same instrument.

13.13

Use of Name.

Neither party may use the other party’s name, trademarks or logo or any
variations of them, alone or with any other word or words, without the prior
written consent of the other party.  Despite this, Client agrees that Patheon
may include Client’s name and logo in customer lists or related marketing and
promotional material for the purpose of identifying users of Patheon’s
Manufacturing Services. 

13.14

Taxes.

 

(a)

VAT.

Any payment due to Patheon under this Agreement in consideration for the
provision of Manufacturing Services to Client by Patheon is exclusive of value
added taxes (“VAT”), turnover taxes, sales taxes or similar taxes, including any
related interest and penalties (together referred to as "Transaction Tax").  If
any Transaction Tax is payable on a Manufacturing Service supplied by Patheon to
Client under this Agreement, this Transaction Tax will be added to the invoice
amount and will be for the account of (and reimbursable to Patheon by) Client.

If any Transaction Tax on the supplies by Patheon is payable by Client under a
reverse charge or withholding procedure (i.e., shifting of liability, accounting
or payment requirement to recipient of supplies), Client will ensure that
Patheon will not effectively be held liable for this Transaction Tax by the
relevant taxing authorities or other parties.

Where applicable, Patheon will use its reasonable commercial efforts to ensure
that its invoices to Client are issued in a way to meet the requirements for
deduction of input VAT by Client, if Client is permitted by law to do so.

Each Party will provide the other with reasonable assistance to enable the
recovery, as permitted by Applicable Laws, of Transaction Tax resulting from
payments made under this Agreement, this recovery to be for the benefit of the
Party bearing the Transaction Tax.

If Patheon is acting as Client’s buying agent, Patheon will always charge to
Client the Transaction Tax in the relevant territory in addition to the amount
paid by Patheon to supplier.

 

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For the avoidance of doubt, reference to the Manufacturing Services in this
Section also includes any element (or the entirety) of the Manufacturing
Services characterized as a supply of goods by Patheon, its subcontractors or
any tax authority for Transaction Tax purposes.

 

(b)

Duties.

Client will bear the cost of all duties, levies, tariffs and similar charges
(and any related interest and penalties) (together “Duties”) however designated,
arising from the performance of the Manufacturing Services by Patheon, including
(without limitation) those imposed as a result of the shipping of materials
(including drug substance, materials, components and finished Product) to, from
or between Patheon sites.  If these Duties are incurred by Patheon, then Patheon
will be entitled to invoice Client for these Duties at the time that they are
incurred.

 

(c)

Withholding Tax.

Where any sum due to be paid to Patheon hereunder is subject to any withholding
or similar tax, Client will pay the withholding or similar tax to the
appropriate Government Authority without deduction from or offset of the amount
then due to Patheon. The Parties agree to cooperate with one another and use
reasonable efforts to reduce or eliminate or enable the recovery of any tax
withholding or similar obligations in respect of royalties, milestone payments,
and other payments made by Client to Patheon under this Agreement.

Patheon will provide Client any tax forms that may be reasonably necessary in
order for Client not to withhold tax or to withhold tax at a reduced rate under
an applicable bilateral income tax treaty.

Each Party will provide the other with reasonable assistance to enable the
recovery, as permitted by Applicable Laws, of withholding taxes, or similar
obligations resulting from payments made under this Agreement, this recovery to
be for the benefit of the Party bearing the withholding tax.

 

(d)

No Offset. Any Transaction Tax, Duty, Withholding Tax or other tax that Client
pays, or is required to pay, but which Client believes should properly be paid
by Patheon under this Agreement may not be offset against sums due by Client to
Patheon whether due under this Agreement or otherwise.

13.15

Governing Law and Jurisdiction.

This Agreement and any Product Agreement, and any dispute or claim (including
non-contractual disputes or claims) arising out of or in connection with them or
their subject matter or formation are governed by the laws of (i) the State of
Delaware if the applicable Patheon party is registered in the United States or
(ii) England if the applicable Patheon party is registered outside the United
States, in each case without regard to any conflicts-of-law principle that
directs the application to another jurisdiction’s law.  Both parties hereby
submit to the exclusive jurisdiction of the courts in the applicable location.
The parties further expressly agree that the UN Convention on Contracts for the
International Sale of Goods will not apply to this Agreement.

13.16

Dispute Resolution.

All disputes that arise under or in connection with this Agreement will be
resolved in accordance with Appendix 2.

[Signature page to follow]

 

Master Manufacturing Services Agreement

Page 34 of 35

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This Agreement is signed by the authorized representatives of the parties on the
dates shown below and will take effect from the Effective Date.

 

PATHEON UK LIMITED

 

SAVARA APS

By:

 

/s/ Mark Newton

 

 

By:

 

/s/ Rob Neville

 

Name:

 

Mark Newton

 

 

Name:

 

Rob Neville

 

Title:

 

Dir GCS

 

 

Title:

 

CEO

 

 

 

 

 

 

 

 

 

 

Date:

 

26 June 2019

 

 

Date:

 

May 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Master Manufacturing Services Agreement

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