exv10w2






Exhibit
10.2




CONFIDENTIAL




CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE

COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS

AMENDED.




Commercial Manufacturing Services Agreement




August 18, 2010




 









 








CONFIDENTIAL




	 	 	 	 	 
	Table of Contents	 	 	 	 
	
 
	ARTICLE 1
	 	 	1	 
	 
	 	 	 	 
	INTERPRETATION
	 	 	1	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	 1	 
	1.2 Currency
	 	 	 4	 
	1.3 Sections and Headings
	 	 	 4	 
	1.4 Singular Terms
	 	 	 5	 
	1.5 Schedules
	 	 	 5	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	6	 
	 
	 	 	 	 
	PATHEON’S MANUFACTURING SERVICES
	 	 	6	 
	 
	 	 	 	 
	2.1 Manufacturing Services
	 	 	 6	 
	2.2 API Yield
	 	 	 7	 
	2.3 API Receipt and Storage
	 	 	 9	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	9	 
	 
	 	 	 	 
	PGX’S OBLIGATIONS
	 	 	9	 
	3.1 Payment
	 	 	 9	 
	 
	 	 	 	 
	ARTICLE 4
	 	 	9	 
	 
	 	 	 	 
	CONVERSION FEES AND COMPONENT COSTS
	 	 	9	 
	 
	 	 	 	 
	4.1 First Year Pricing
	 	 	 9	 
	4.2 Price Adjustments — Subsequent Years’ Pricing
	 	 	 9	 
	4.3 Price Adjustments — Current Year Pricing
	 	 	10	 
	4.4 Cost Improvement Program
	 	 	11	 
	4.5 Adjustments Due to Technical Changes
	 	 	11	 
	4.6 Multi-Country Packaging Requirements
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	12	 
	 
	 	 	 	 
	ORDERS, SHIPMENT, INVOICING, PAYMENT
	 	 	12	 
	 
	 	 	 	 
	5.1 Orders and Forecasts
	 	 	12	 
	5.2 Reliance by Patheon
	 	 	13	 
	5.3 Minimum Orders
	 	 	13	 
	5.4 Shipments
	 	 	13	 
	5.5 On Time Delivery
	 	 	13	 
	5.6 Invoices and Payment
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	14	 
	 
	 	 	 	 
	PRODUCT CLAIMS AND RECALLS
	 	 	14	 
	 
	 	 	 	 
	6.1 Product Claims
	 	 	14	 
	6.2 Product Recalls and Returns
	 	 	16	 






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	6.3 Patheon’s Responsibility for Defective and Recalled Products
	 	 	16	 
	6.4 Disposition of Defective or Recalled Products
	 	 	17	 
	6.5 Healthcare Provider or Patient Questions and Complaints
	 	 	17	 
	6.6 Sole Remedy
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 7
	 	 	18	 
	 
	 	 	 	 
	CO-OPERATION
	 	 	18	 
	7.1 Quarterly Review
	 	 	18	 
	7.2 Governmental Agencies
	 	 	18	 
	7.3 Records and Accounting by Patheon
	 	 	18	 
	7.4 Inspection
	 	 	19	 
	7.5 Access
	 	 	19	 
	7.6 Notification of Regulatory Inspections
	 	 	19	 
	7.7 Reports
	 	 	19	 
	7.8 FDA Filings
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	20	 
	 
	 	 	 	 
	TERM AND TERMINATION
	 	 	20	 
	8.1 Term
	 	 	20	 
	8.2 Termination for Cause
	 	 	21	 
	8.3 Product Discontinuation
	 	 	21	 
	8.4 Obligations on Termination
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 9
	 	 	22	 
	 
	 	 	 	 
	REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	22	 
	 
	 	 	 	 
	9.1 Authority
	 	 	22	 
	9.2 PGx Warranties
	 	 	22	 
	9.3 Patheon Warranties
	 	 	23	 
	9.4 Debarred Persons
	 	 	23	 
	9.5 Permits
	 	 	23	 
	9.6 No Warranty
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 10
	 	 	24	 
	 
	 	 	 	 
	REMEDIES AND INDEMNITIES
	 	 	24	 
	10.1 Consequential Damages
	 	 	24	 
	10.2 Limitation of Liability
	 	 	24	 
	10.3 Patheon
	 	 	24	 
	10.4 PGx
	 	 	25	 
	10.5 Reasonable Allocation of Risk
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 11
	 	 	25	 
	 
	 	 	 	 
	CONFIDENTIALITY
	 	 	25	 
	11.1 Confidentiality
	 	 	25	 






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	ARTICLE 12
	 	 	25	 
	 
	 	 	 	 
	DISPUTE RESOLUTION
	 	 	25	 
	 
	 	 	 	 
	12.1 Commercial Disputes
	 	 	25	 
	12.2 Technical Dispute Resolution
	 	 	26	 
	ARTICLE 13
	 	 	26	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	26	 
	 
	 	 	 	 
	13.1 Inventions
	 	 	26	 
	13.2 Intellectual Property
	 	 	27	 
	13.3 Insurance
	 	 	27	 
	13.4 Independent Contractors
	 	 	27	 
	13.5 No Waiver
	 	 	28	 
	13.6 Assignment
	 	 	28	 
	13.7 Force Majeure
	 	 	28	 
	13.8 Additional Product
	 	 	28	 
	13.9 Notices
	 	 	29	 
	13.10 Severability
	 	 	29	 
	13.11 Entire Agreement
	 	 	30	 
	13.12 Other Terms
	 	 	30	 
	13.13 No Third Party Benefit or Right
	 	 	30	 
	13.14 Execution in Counterparts
	 	 	30	 
	13.15 Use of PGx Name
	 	 	30	 
	13.16 Governing Law
	 	 	30	 
	 
	 	 	 	 
	SCHEDULE A
	 	 	1	 
	 
	 	 	 	 
	PRODUCT LIST AND SPECIFICATIONS
	 	 	1	 
	 
	 	 	 	 
	SCHEDULE B
	 	 	2	 
	 
	 	 	 	 
	MINIMUM RUN QUANTITY, ANNUAL VOLUME, AND PRICE
	 	 	2	 
	 
	 	 	 	 
	SCHEDULE C
	 	 	3	 
	 
	 	 	 	 
	ANNUAL STABILITY TESTING
	 	 	3	 
	 
	 	 	 	 
	SCHEDULE D
	 	 	1	 
	 
	 	 	 	 
	ACTIVE MATERIALS
	 	 	1	 
	 
	 	 	 	 
	SCHEDULE E
	 	 	2	 
	 
	 	 	 	 
	TECHNICAL DISPUTE RESOLUTION
	 	 	2	 
	 
	 	 	 	 
	SCHEDULE F
	 	 	1	 
	 
	 	 	 	 
	COMMERCIAL QUALITY AGREEMENT
	 	 	1	 
	 
	 	 	 	 
	SCHEDULE G
	 	 	2	 







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CONFIDENTIAL




COMMERCIAL MANUFACTURING SERVICES AGREEMENT




          THIS COMMERCIAL MANUFACTURING SERVICES AGREEMENT (this “Agreement”) is made as of August 18,
2010 (the “Effective Date”)


B E T W E E N:





PATHEON PUERTO RICO, INC.,




a corporation existing under the laws of the Commonwealth of Puerto
Rico



-and-




PATHEON PHARMACEUTICALS INC., a corporation existing under the laws
of the State of Delaware




(collectively “Patheon”),



- and -




PGxHealth, LLC




a limited liability company existing under the laws of the State of
Delaware




(“PGx”).



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



ARTICLE 1




INTERPRETATION



1.1 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:




“Active Materials”, “Active Pharmaceutical Ingredients” or “API” means the materials listed
on Schedule D;




“API Credit Value” means the value of the API for certain purposes of this Agreement, as set
forth on Schedule D;





“Affiliate” means:




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






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




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






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




“Annual Report” means the annual report to the FDA prepared by PGx regarding the Product as
described in Title 21 of the United States Code of Federal Regulations, Section
314.81(b)(2);




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




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




“Applicable Laws” means (i) for Patheon, the Laws of the Commonwealth of Puerto Rico, being
the jurisdiction where the Manufacturing Site is located; and (ii) for PGx and the Products,
the Laws of all jurisdictions where the Products are manufactured, distributed, and marketed
as these are agreed and understood by the parties in this 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;




“Business Day” means a day other than a Saturday, Sunday or a day that is a statutory
holiday (i) if, in the case of Patheon, in the Commonwealth of Puerto Rico, and (ii) if, in
the case of PGx, in the Commonwealth of Massachusetts;




“cGMPs” means current good manufacturing practices as described in Parts 210 and 211 of
Title 21 of the United States Code of Federal Regulations together with the latest FDA
guidance documents pertaining to pharmaceutical manufacturing and quality control practice,
all as updated, amended and revised from time to time;




“Components” means, collectively, all packaging components, raw materials, and ingredients
(including labels, product inserts and other labelling for the Products), required to
manufacture the Products in accordance with the Specifications, other than the API;




“Confidentiality Agreement” means the agreement about the non-disclosure of confidential
information between Patheon and PGx dated October 9, 2008;




“Deficiency Notice” has the meaning specified in Section 6.1(a);




“Delivery Date” means the date scheduled for shipment of Product under a Firm Order as set
forth in Section 5.1(e);




“FDA” means the United States Food and Drug Administration;





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



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




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




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




“Late Delivery” has the meaning specified in Section 5.5;




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




“Manufacturing Services” means any manufacturing, quality control, quality assurance,
stability testing, packaging, and related services, set forth in this Agreement, required to
manufacture Product or Products from API and Components in accordance with the terms and
conditions of this Agreement;




“Manufacturing Site” means the facility owned and operated by Patheon that is located at
[*];




“Materials” means all Components, and other materials used to manufacture the Product other
than API;




“Maximum API Liability” means the maximum value of API that may be credited by Patheon under
this Agreement, as set forth on Schedule D;




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




“Patheon Intellectual Property” means Intellectual Property generated or derived by Patheon
before performing any Manufacturing Services, Intellectual Property 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, PGx’s API,
Product or confidential information including, without limitation, Inventions and
Intellectual Property which may apply to manufacturing processes or the formulation or
development of drug products, drug product dosage forms or drug delivery systems unrelated
to the specific Product(s);




“PGx Intellectual Property” means Intellectual Property generated or derived by PGx before
entering into this Agreement, or by Patheon while performing any Manufacturing Services or
otherwise generated or derived by Patheon in its business which Intellectual Property is
specific to, or dependent upon, PGx’s API, Product or confidential information; including,
without limitation, rights in patents, patent applications, formulae, trade-marks,
trade-mark applications, trade-names, Inventions, copyrights, industrial designs, trade
secrets, and know how;




“Price” means the price measured in US Dollars to be charged by Patheon for performing the
Manufacturing Services, and includes [*];




Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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CONFIDENTIAL





“Product(s)” means the product(s) listed on Schedule A;




“Quality Agreement” means the agreement set forth in Schedule F between the parties setting
out the quality assurance standards for the Manufacturing Services to be performed by
Patheon for PGx;




“Regulatory Authority” means the FDA;




“RFID” means Radio Frequency Identification Devices which (at present or in the future) may
be affixed to Products or Materials to assist in inventory control, tracking, and
identification;




“Specifications” means the file, for each Product, attached at Schedule A that contains
documents relating to each Product, including, without limitation:




	 	(a)	 	specifications for API and Components;






	 	(b)	 	manufacturing specifications, directions, and processes;






	 	(c)	 	storage requirements;






	 	(d)	 	all environmental, health and safety information for each Product including
material safety data sheets; and






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






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




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




“Territory” means the geographic area of the United States of America;




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




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


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



1.3 Sections and Headings.



The division of this Agreement into Articles, Sections, Subsections, 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 or
Schedule refers to the specified Section or Schedule to this Agreement. In this Agreement, the
terms “this Agreement”, “hereof”, “herein”, “hereunder” and similar expressions refer to this
Agreement and not to any particular part, Section or Schedule of this Agreement.






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CONFIDENTIAL






1.4 Singular Terms.




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


1.5 Schedules.




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



	 	 	 	 	 

	Schedule A

	 	—
	 	Product List and Specifications
	Schedule B

	 	—
	 	Minimum Run Quantity, Annual Volume, and Price
	Schedule C

	 	—
	 	Annual Stability Testing
	Schedule D

	 	—
	 	API, API Credit Value, and Maximum API Liability
	Schedule E

	 	—
	 	Technical Dispute Resolution
	Schedule F

	 	—
	 	Commercial Quality Agreement
	Schedule G

	 	—
	 	(Reserved)
	Schedule H

	 	—
	 	Quarterly API Inventory Report
	Schedule I

	 	—
	 	Report of Annual API Inventory Reconciliation and Calculation of Actual
Annual Yield





          
Schedules may be modified by the parties as stated herein.

- 5 -









 





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ARTICLE 2




PATHEON’S MANUFACTURING SERVICES


2.1 Manufacturing Services.




          Patheon will perform the Manufacturing Services for the Territory for the fees specified in
Schedules B and C to manufacture Products for PGx. None of the Manufacturing Services may be
subcontracted by Patheon without PGx’s prior written consent, except for testing under Article
13.6(a) of this Agreement. The Product will be manufactured and packaged into bottles at the
Manufacturing Site. Schedule B sets forth a list of cost items that are included in the Price for
Products; all cost items that are not included in this list are excluded from the Price and are
subject to additional fees to be paid by PGx. Patheon may change the Manufacturing Site for the
Products at Patheon’s cost but only with the prior written consent of PGx, which consent will be at
PGx’s sole discretion. If Manufacturing Services have not started within [*] months of
the date of execution of this Agreement, Patheon may amend the fees set out in Schedules B and C.
Patheon will be the manufacturer of at least [*]% of total number of tablets for use in
Product and of at least [*]% of the bottled Products offered for sale annually by Client
in the Territory for the first [*] Years. Thereafter, Patheon will be the manufacturer
of at least [*]% of the total number of tablets for use in Product and of at least
[*]% of the bottled Products offered for sale annually by Client in the Territory.
[*] In performing the Manufacturing Services, Patheon and PGx agree that:




	 	(a)	 	Conversion of API and Components. Patheon will convert API and
Components into Products.






	 	(b)	 	Quality Control and Quality Assurance. Patheon will perform the
quality control and quality assurance testing specified in the Quality Agreement.
Batch review and release to PGx will be the responsibility of Patheon’s quality
assurance group. Patheon will perform its batch review and release responsibilities in
accordance with Patheon’s standard operating procedures. Each time Patheon ships
Products to PGx, it will give PGx a certificate of analysis, certificate of compliance
including a statement that the batch has been manufactured and tested in accordance
with Specifications and cGMPs, and, full Batch Production Records/Lot Packaging
Records, including all deviations and laboratory investigation reports (unless PGx
requests a summary Batch Record and/or Packaging Record). PGx will have sole
responsibility for the release of Products to the market. The form and style of batch
documents, including, but not limited to, batch production records, lot packaging
records, equipment set up control, operating parameters, and data printouts, raw
material data, and laboratory notebooks are the exclusive property of Patheon.
Notwithstanding Patheon’s interest in the form and style of batch documents, Product
related information contained in those batch documents is PGx property, and PGx may use
that Product related information in any way it sees fit.






	 	(c)	 	Components. Patheon will purchase and test all Components (with the
exception of those that are supplied by PGx) at Patheon’s expense and as required by
the Specifications. PGx will have the right to specify the suppliers for the
Components. Patheon shall not change any Component Specifications or Component
suppliers without the prior written consent of PGx.






	 	(d)	 	Stability Testing. If requested by PGx, Patheon will conduct stability
testing on the Products in accordance with the protocols set out in the Specifications
for the separate fees and during the time periods to be set out in Schedule C as
necessary. Patheon will





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



- 6 -









 





CONFIDENTIAL





	 	 	 	not make any changes to these testing protocols without prior written approval from
PGx. If a confirmed stability test failure occurs, Patheon will notify PGx within one
Business Day, after which Patheon and PGx will jointly determine the proceedings and
methods to be undertaken to investigate the cause of the failure, including which party
will bear the cost of the investigation. Patheon will not be liable for these costs
unless it has failed to perform the Manufacturing Services in accordance with the
Specifications, cGMPs, and Applicable Laws. Patheon will give PGx all stability test
data and results at PGx’s request.






	 	(e)	 	Packaging. Patheon will package the Products at the Manufacturing Site
as set out in the Specifications. PGx will be responsible for the cost of artwork
development. Pursuant to the Quality Agreement, Patheon will determine and imprint the
batch numbers and expiration dates for each Product shipped. The batch numbers and
expiration dates will be affixed on the Products and on the shipping carton of each
Product as outlined in the Specifications and as required by cGMPs. PGx may, in its
sole discretion, make changes to labels, product inserts, and other packaging for the
Products. Those changes will be submitted by PGx to all applicable governmental
agencies and other third parties responsible for the approval of the Products. PGx
will be responsible for the cost of labelling obsolescence when changes occur, as
contemplated in Section 4.4. Patheon’s name will not appear on the label or anywhere
else on the Products unless: (i) required by any Laws; or (ii) Patheon consents in
writing to the use of its name.






	 	(f)	 	API and PGx Supplied Components Importing. Until the [*]
month anniversary of the date of commercial launch of Product, at least [*]
days before each scheduled production date, PGx will deliver the API to the
Manufacturing Site DDP (Incoterms 2000) sufficient for Patheon to manufacture the
desired quantities of Product and to ship Product on the Delivery Date; after such
[*] month period, all such deliveries shall be made at least [*]
days before each scheduled production date. [*] But if Patheon is unable to
manufacture Product to meet this new shipment date due to prior third party production
commitments, Patheon may delay the shipment until a later date to be agreed to by the
parties. All shipments of API will be accompanied by certificate(s) of analysis from
the API manufacturer and PGx, confirming the identity and purity of the API and its
compliance with the API specifications.






	 	(g)	 	Product Rejection for Finished Product Specification Failure. If
Patheon manufactures Product in accordance with the Specifications, except that a batch
or portion of batch of Product does not meet a finished Product specification (as
provided in (e) of the definition of “Specifications” above), Client will
[*].




2.2 API Yield.





	 	(a)	 	Reporting. Patheon will give PGx a quarterly inventory report of the
API held by Patheon using the inventory report form set out in Schedule H, which will
contain the following information for the quarter:






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






	 	 	 	Quantity Dispensed: The total quantity of API dispensed at the Manufacturing Site
during the applicable period. The Quantity Dispensed is calculated by adding the
Quantity Received to the inventory of API that complies with the Specifications held
at the





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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	 	 	 	beginning of the applicable period, less the inventory of API that complies
with the Specifications held at the end of the period. The Quantity Dispensed will
only include API received and dispensed in commercial manufacturing of Products and,
for certainty, will not include any (i) API that must be retained by Patheon as
samples, (ii) API contained in Product that must be retained as samples, (iii) API
used in testing (if applicable), and (iv) API received or dispensed in technical
transfer activities or development activities during the applicable period,
including without limitation, any regulatory, stability, validation or test batches
manufactured during the applicable period.






	 	 	 	Quantity Converted: The total amount of API contained in the Products manufactured
with the Quantity Dispensed (including any additional Products produced in
accordance with Section 6.1 or 6.2), delivered by Patheon, and not rejected,
recalled or returned in accordance with Section 6.1 or 6.2 because of Patheon’s
failure to perform the Manufacturing Services in accordance with Specifications,
cGMPs, and Applicable Laws.






	 	 	 	Within 60 days after the end of each Year, Patheon will prepare an annual
reconciliation of API on the reconciliation report form set forth in Schedule I
including the calculation of the “Actual Annual Yield” or “AAY” for the Product at
the Manufacturing Site during the Year. AAY is the percentage of the Quantity
Dispensed that was converted to Products and is calculated as follows:






	 	 	 	Quantity Converted during the Year	 	x	 	100%
	 	 	 	Quantity Dispensed during the Year






	 	 	 	After Patheon has produced a minimum of [*] commercial production batches
of Product and has produced commercial production batches for at least [*]
months at the Manufacturing Site, the average yield based on the immediate prior
three months of production will be the initial “Target Yield” [(Quanity Converted
during the immediate prior three months/Quantity Dispensed during the immediate
prior three months) * 100%]. Thereafter the Target Yield will be recalculated every
12 months as the average of the actual yields of the immediate prior three months.
The Target Yield will be applicable as of the date calculated.






	 	(b)	 	Shortfall Calculation. If the Actual Annual Yield (“AAY”) falls more
than [*] percent below the respective Target Yield in a Year, then the
shortfall for the Year (the “Shortfall”) will be calculated as follows:






	 	 	 	Shortfall = [(Target Yield – [*] * API Credit Value * Quantity Dispensed






	 	(c)	 	Credit for Shortfall. If there is a Shortfall for a Product in a Year,
then Patheon will credit PGx’s account for the amount of the Shortfall not later than
60 days after the end of the Year.






	 	 	 	Each credit under this Section 2.2(c) will be summarized on the reconciliation
report form set forth in Schedule I. Upon expiration or termination of this
Agreement, any remaining
credit owing under this Section 2.2 will be paid to PGx. The Annual Shortfall, if
any, will be disclosed by Patheon on the reconciliation report.form.






	 	(d)	 	Maximum Liability for API. Patheon’s liability for API calculated in
accordance with this Section 2.2 for any Product in a Year will not exceed, in the
aggregate, [*].





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



- 8 -









 





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	 	(e)	 	No Material Breach. It will not be a material breach of this Agreement
by Patheon under Section 8.2(a) if the Actual Annual Yield is less than the Target
Yield.




2.3 API Receipt and Storage.




          Prior to performing Manufacturing Services Patheon shall receive API and store API on behalf
of PGx in compliance with the cGMPs and this Agreement. Within [*] days of receipt of
API, Patheon shall verify the quantity, and identity of all API received and review the
documentation related to the API and shall notify PGx of any discrepancies. Patheon shall store the
API under the appropriate conditions per the applicable cGMPs and this Agreement and shall keep
such API segregated from other materials within its control so as to maintain the integrity of the
API. Except as approved by PGx in writing, Patheon shall ensure the API is not used or tested by
any party not under its direct supervision and controls and shall only be used by it to provide the
Manufacturing Services.



ARTICLE 3




PGX’S OBLIGATIONS


3.1 Payment.




          PGx will pay Patheon for performing the Manufacturing Services according to the Prices
specified in Schedules B and C. These prices may be subject to adjustment under other parts of this
Agreement. PGx may offset any amounts owed by Patheon to PGx against amounts owed by PGx hereunder.


3.2 API.




          PGx will at its sole cost and expense, deliver the API to Patheon (in accordance with Section
2.1(f)) sufficient for Patheon to manufacture the desired quantities of Product and to ship Product
on the Delivery Date. The API will be held by Patheon on behalf of PGx as set forth in this
Agreement. Title to the API will at all times remain the property of PGx. Any API received by
Patheon will only be used by Patheon to perform the Manufacturing Services.



ARTICLE 4




CONVERSION FEES AND COMPONENT COSTS


4.1 First Year Pricing.




          The tiered Price and annual stability Price for the Products for the first Year are listed in
Schedules B and C and are subject to the adjustments set forth in Sections 4.2 and 4.3.


4.2 Price Adjustments — Subsequent Years’ Pricing.




          After [*], Patheon may adjust the Price effective January 1st of each
Year as follows:





	 	(a)	 	Manufacturing Costs. [*] On or about November 1st
of each Year, Patheon will provide PGx a statement setting forth the calculation for
the inflation adjustment to be applied in calculating the Price for the next Year,
which statement must be agreed upon in writing by PGx before becoming effective.





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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	 	(b)	 	Component Costs. [*] On or about November 1st of each Year,
Patheon will give PGx information about the increase in Component costs which, upon
approval in writing by PGx, will be applied to the calculation of the Price for the
next Year to reasonably demonstrate that the Price increase is justified. But Patheon
will not be required to give information to PGx that is subject to industry standard
obligations of confidentiality between Patheon and its suppliers.






	 	(c)	 	Pricing Basis. [*] On or about November 1st of
each Year, Patheon will give PGx a statement setting forth the information to be
applied in calculating those cost increases for the next Year. But Patheon will not be
required to give information to PGx that is subject to industry standard obligations of
confidentiality between Patheon and its suppliers.






	 	(d)	 	Tier Pricing. [*] The Client will be invoiced during the
Year for the unit price set forth in the Annual Volume tier based on the [*]
month forecast provided in September of the previous Year. Within 30 days of the end
of each Year or of the termination of the Agreement, Patheon will send Client a
reconciliation of the actual volume of Product ordered by the Client during the Year
with the pricing tiers. If Client has overpaid during the Year, Patheon will issue a
credit to the Client for the amount of the overpayment within [*] days of the
end of the Year or will issue payment to the Client for the overpayment within
[*] days of the termination of the Agreement. If Client has underpaid during
the Year, Patheon will issue an invoice to the Client for the amount of the
underpayment within [*] days of the end of the Year or the termination of
the Agreement, as applicable. If Client disagrees with the reconciliation, the parties
will work in good faith to resolve the disagreement amicably. If the parties are unable
to resolve the disagreement within 30 days, the matter will be handled under Section
12.1.





          For all Price adjustments under this Section 4.2, Patheon will deliver to PGx on or about
November 1st of each Year a revised Schedule B to be approved in writing by PGx before
becoming effective for the next Year.


4.3 Price Adjustments — Current Year Pricing.




          During any Year of this Agreement, the Prices set out in Schedule B will be adjusted by the
parties as follows:




Extraordinary Increases in Component Costs. If, at any time, market conditions
result in Patheon’s cost of Components being materially greater than normal forecasted
increases, then Patheon will be entitled, upon written approval from PGx, to an adjustment
to the Price for any affected Product to compensate Patheon for the increased Component
costs. Changes materially greater than normal forecasted increases will have occurred if:
(i) the cost of a Component increases by [*]% of the cost for that Component upon
which the most recent fee quote was based; or (ii) the aggregate cost for all Components
required to manufacture a Product
increases by [*]% of the total Component costs for the Product upon which the most
recent fee quote was based. If Component costs have been previously adjusted to reflect an
increase in the cost of one or more Components, the adjustments set out in (i) and (ii)
above will operate based on the last cost adjustment for the Components.



Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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For a Price adjustment under this Section 4.3, Patheon will deliver to PGx a revised
Schedule B and budgetary pricing information, adjusted Component costs or other documents
reasonably sufficient to demonstrate that a Price adjustment is justified, in order to
support PGx approval. Patheon will have no obligation to deliver any supporting documents
that are subject to industry standard obligations of confidentiality between Patheon and its
suppliers. The revised Price will be effective for any Product delivered on or after the
first day of the month following PGx’s written approval of the revised Schedule B.


4.4 Cost Improvement Program.




          Patheon and PGx agree to work together to develop cost reduction initiatives as part of an
overall cost improvement program, provided such program does not involve additional capital or
extraordinary costs unless otherwise agreed to by parties in writing. All net cost savings (net of
implementation costs) realized from the cost improvement program will be [*]. A “cost
reduction initiative” for the purpose of this Agreement will be an initiative that reduces the
internal or out-of-pocket costs incurred by a party in connection with the performance of its
obligations under this Agreement. It is further agreed by the parties that on-going method
improvements developed or adopted by either PGx or Patheon independently of the other party(ies),
will not be a cost reduction initiative under this section, and there will be no obligation on such
party to share the net cost savings realized from such improvement with the other party(ies) to
this Agreement.


4.5 Adjustments Due to Technical Changes.




          Amendments to the Specifications or the Quality Agreement requested by PGx will only be
implemented following a technical and cost review by Patheon and are subject to PGx and Patheon
reaching agreement on Price changes required because of the amendment. Amendments to the
Specifications or the Quality Agreement requested by Patheon will only be implemented following the
written approval of PGx. If PGx accepts a proposed Price change, the proposed change in the
Specifications will be implemented, and the Price change will become effective, only for those
orders of Products that are manufactured under the revised Specifications. In addition, PGx agrees
to purchase, at Patheon’s cost (including all costs incurred by Patheon for the purchase and
handling of the Inventory), all Inventory used under the “old” Specifications and purchased or
maintained by Patheon in order to fill Firm Orders or under Section 5.2, if the Inventory can no
longer be used under the revised Specifications. Open purchase orders for Components no longer
required under any revised Specifications that were placed by Patheon with suppliers in order to
fill Firm Orders or under Section 5.2 will be cancelled where possible, and if the orders may not
be cancelled without penalty, will be assigned to and satisfied by PGx.


4.6 Multi-Country Packaging Requirements.




          If PGx decides to have Patheon perform Manufacturing Services for the Product for countries
outside the Territory, then PGx will inform Patheon of the packaging requirements for each new
country and Patheon will prepare a quotation for consideration by PGx of any additional Component
costs and the change over fees for the Product destined for each new country. The agreed
additional packaging requirements and related packaging costs and change over fees will be set out
in a written amendment to this Agreement.



Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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ARTICLE 5




ORDERS, SHIPMENT, INVOICING, PAYMENT


5.1 Orders and Forecasts.





	 	(a)	 	Rolling 18 Month Forecast. When this Agreement is executed, PGx will
give Patheon a non-binding 18 month forecast of the volume of Product that PGx expects
to order in the first 18 months of commercial manufacture of the Product. For clarity,
commercial manufacture excludes the manufacture of Product validation batches. This
forecast will then be updated by PGx on or before the 10th day of each month
on a rolling forward basis. PGx will update the forecast forthwith if it determines
that the volumes estimated in the most recent forecast have changed by more than
[*]%. The most recent 18 month forecast will prevail.






	 	(b)	 	Firm Orders for Initial Manufacturing Month. At least three months
before the start of commercial manufacture of the Product, PGx will update the rolling
forecast for the first three months of manufacture of the Product (the “Initial
Manufacturing Period”). The first month of this updated forecast (“Initial
Manufacturing Month”) will constitute a firm written order in the form of a purchase
order or otherwise (“First Firm Order”) by PGx to purchase and, when accepted by
Patheon pursuant to 5.1(d), for Patheon to manufacture the quantity of the Product.
PGx may cancel any Batches from the First Firm Order at no cost if notice of
cancellation is received by Patheon [*] days or more before the scheduled
Delivery Date under the First Firm Order. [*] If the First Firm Order is
changed or adjusted as described above then the initial rolling 18 month forecast will
also be adjusted as necessary.






	 	 	 	Firm Orders Thereafter. Before and through the Initial Manufacturing Month,
and on a rolling basis during the term of this Agreement, and on or before the 10th
day of each month, PGx will issue an updated 18 month forecast. The applicable
portions of the forecast shall only become binding upon PGx’s delivery to Patheon of
purchase orders which shall be issued by PGx no less than (i) 110 days prior to
the Delivery Date for bottles and (ii) 90 days prior to the Delivery Date for bulk
packaging (“Firm Order(s)”). Patheon shall acknowledge Firm Orders pursuant to
Section 5.1(d). [*] Firm Orders submitted to Patheon will specify PGx’s
Manufacturing Services purchase order number, quantities by Product type, monthly
delivery schedule, and any other elements necessary to ensure the timely manufacture
and shipment of the Products. Additionally, within 60 days of the scheduled Delivery
Date, Subject to the availability of Components and API, PGx may increase the
quantity of any and all products ordered by up to [*]% over the original
order and may change the Product mix of the order and Patheon will make commercially
reasonable efforts to fulfil such increase or change in Product mix.






	 	(c)	 	Three Year Forecast. On or before the 10th day of June of
each Year, PGx will give Patheon a written non-binding three-year forecast, broken down
by quarters for the second and third years of the forecast, of the volume of each
Product PGx then anticipates will be required to be manufactured and delivered to PGx
during the three-year period.






	 	(d)	 	Acknowledgement of Firm Order. Patheon shall acknowledge Firm Orders
by sending an acknowledgement to PGx within [*] Business Days of its receipt
of the Firm Order. The acknowledgement will include, subject to confirmation from PGx,
the Delivery Date for the





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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	 	 	 	Product ordered. The Delivery Date may be amended by agreement of the Parties or as
set forth in Sections 2.1(f) or 5.1(b).




5.2 Reliance by Patheon.




     (a) PGx understands and acknowledges that Patheon will rely on the Firm Orders and rolling
forecasts submitted under Sections 5.1(a), (b), and (c) in ordering the Components required to meet
the Firm Orders. In addition, PGx understands that to ensure an orderly supply of the Components,
Patheon may want to purchase the Components in sufficient volumes to meet the production
requirements for Products during part or all of the forecasted periods referred to in Section
5.1(a) or to meet the production requirements of any longer period agreed to by Patheon and PGx.
Accordingly, PGx authorizes Patheon to purchase Components to satisfy the Manufacturing Services
requirements for Products for the first six months contemplated in the most recent forecast given
by PGx under Section 5.1(a). Patheon may make other purchases of Components to meet Manufacturing
Services requirements for longer periods if agreed to in writing by the parties. PGx will give
Patheon written authorization to order Components for any launch quantities of Product requested by
PGx which will be considered a Firm Order when accepted by Patheon. If Components ordered by
Patheon under Firm Orders or this Section 5.2 are not included in finished Products manufactured
for PGx within six months after the forecasted month for which the purchases have been made (or for
a longer period as the parties may agree) or if the Components have expired during the period, then
PGx will pay to Patheon its costs therefor (including all costs incurred by Patheon for the
purchase and handling of the Components). But if these Components are used in Products
subsequently manufactured for PGx or in third party products manufactured by Patheon, PGx will
receive credit for any costs of those Components previously paid to Patheon by PGx.



     (b) If PGx fails to take possession or arrange for the destruction of Components within 12
months of purchase or, in the case of finished Product, within three months of manufacture, PGx
will pay Patheon [*] thereafter for storing the Components or finished Product. Storage
fees for Components or Product which contain controlled substances or require refrigeration will be
charged at [*]. Storage fees are subject to a [*] minimum charge per month.
Patheon may ship finished Product held by it longer than 3 months to the PGx at PGx’s expense on 14
days written notice to the PGx.


5.3 Minimum Orders.




          PGx may only order Manufacturing Services for batches of Products in multiples of the Minimum
Run Quantities as set out in Schedule B.


5.4 Shipments.




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


5.5 On Time Delivery.





	(a)	 	Patheon and the PGx understand that there may be uncertainties and necessary adjustments in
production schedules during the Initial Manufacturing Period. The parties agree that they
will





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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	 	 	work together closely to expedite deliveries and manage the scheduling of the initial
Product launch.






	(b)	 	If, after the Initial Manufacturing Period, Patheon is unable to deliver the quantity of
Product ordered under a Firm Order on the Delivery Date not due to an act or omission by PGx
nor a Force Majeure (a “Late Delivery”), PGx will receive a credit from Patheon for the Late
Delivery that will be applied against the any amounts due by PGx to Patheon. The credit will
be [*]% of the Price of the quantities of Product not delivered by Patheon under the
Firm Order on the Delivery Date [*]. In addition, if [*] or more Late
Deliveries occur in any [*] month period, [*]






	(c)	 	A Late Delivery will not be a material breach of this Agreement by Patheon for the
purposes of Section 8.2.






	(d)	 	Any Late Delivery that has not occurred by the date that is [*] days after the
Delivery Date may have its Firm Order cancelled by PGx, in its sole discretion with no fees or
penalties owed by PGx.






	(e)	 	For clarity, a Late Delivery will not include any delay in shipment of Product caused by
events outside of Patheon’s reasonable control, such as a Force Majeure Event, a delay in
delivery of API or Materials, a delay in Product release approval from PGx, receipt of
non-conforming API or Components supplied by PGx, or any market driven delays in deliveries
from approved vendors.




5.6 Invoices and Payment.




          Invoices will be sent by fax or email to the fax number or email address given by PGx to
Patheon in writing from time to time. Invoices will be sent when the Product is manufactured and
released by Patheon to PGx. Patheon will also submit to PGx, with each shipment of Products, a
duplicate copy of the invoice covering the shipment. Patheon will also give PGx an invoice
covering any Inventory or Components which are to be purchased by PGx under Section 5.2 of this
Agreement. Each invoice will, to the extent applicable, identify PGx’s Manufacturing Services
purchase order number, Product numbers, names and quantities, unit price, freight charges, and the
total amount to be paid by PGx. Subject to section 6.1(a) herein, PGx will pay all undisputed
invoices within 30 days of receipt thereof.



ARTICLE
6

PRODUCT CLAIMS AND RECALLS



6.1 Product Claims.




     (a) Product Claims. PGx has the right to reject any portion of any shipment of
Products that deviates from the Specifications, cGMPs, or Applicable Laws without invalidating any
remainder of the shipment. PGx will inspect the Products manufactured by Patheon and review the
documentation as set forth in Section 2.1b upon receipt and will give Patheon written notice (a
“Deficiency Notice”) of all claims for Products that deviate from the Specifications, cGMPs, or
Applicable Laws within 30 days after PGx’s receipt thereof (or, in the case of any defects not
reasonably susceptible to discovery upon receipt of the Product, within 30 days after discovery by
PGx, but not after the expiration date of the Product). Should PGx fail to give Patheon the
Deficiency Notice within the applicable 30 day period, then the delivery will be deemed to have
been accepted by PGx on the 30th day after delivery or discovery, as applicable. Except
as set out in Section 6.3, Patheon will have no liability for any deviations for which it has not
received notice within the applicable 30 day period. Payment for any Product that is the subject of



Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



- 14 -









 





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a Deficiency Notice shall not be owed by PGx until the determination of deficiency has been
made under Section 6.1(b) hereof.




     (b) Determination of Deficiency. Upon receipt of a Deficiency Notice, Patheon will
have [*] days to advise PGx by notice in writing that it disagrees with the contents of
the Deficiency Notice. If PGx and Patheon fail to agree within [*] days after Patheon’s
notice to PGx as to whether any Products identified in the Deficiency Notice deviate from the
Specifications, cGMPs, or Applicable Laws, then the parties will mutually select an independent
laboratory or quality assurance consultant, as applicable, to evaluate if the Products deviate from
the Specifications, cGMPs, or Applicable Laws. This evaluation will be binding on the parties. If
the evaluation certifies that any Products deviate from the Specifications, cGMPs, or Applicable
Laws, PGx may reject those Products in the manner contemplated in this Section 6.1 and Patheon will
be responsible for the cost of the evaluation. If the evaluation does not so certify for any of
the Products, then PGx will be deemed to have accepted delivery of the Products on the
[*] day after delivery (or, in the case of any defects not reasonably susceptible to
discovery upon receipt of the Product, on the [*] day after discovery thereof by PGx, but
not after the expiration date of the Product) and PGx will be responsible for the cost of the
evaluation.



     (c) Shortages. Claims for shortages in the amount of Products shipped by Patheon will
be dealt with under the same procedure identified in Section 6.1(b) for determinations of
deficiency.



Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.



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6.2 Product Recalls and Returns.




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



     (b) Recalls. If (i) any governmental or 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) PGx
determines that any Product should be Recalled or that a “Dear Doctor” letter is required relating
the restrictions on the use of any Product, Patheon will co-operate as reasonably required by PGx,
having regard to all applicable laws and regulations.



     (c) Product Returns. PGx will have the responsibility for handling customer returns
of the Products. Patheon will give PGx any assistance that PGx may reasonably require to handle
the returns.


6.3 Patheon’s Responsibility for Defective and Recalled Products.




     (a) Defective Product. If PGx rejects Products under Section 6.1 and the
deviation is determined to have arisen from Patheon’s failure to provide the Manufacturing Services
in accordance with the Specifications, cGMPs, and Applicable Laws, Patheon will credit PGx’s
account for Patheon’s invoice price for the defective Products. If PGx previously paid for the
defective Products, Patheon will promptly, at PGx’s election, either: (i) refund the invoice price
for the defective Products; (ii) offset the amount paid against other amounts due to Patheon
hereunder; or (iii) replace the Products with conforming Products without PGx being liable for
payment therefor under Section 3.1, contingent upon the receipt from PGx of all API required for
the manufacture of the replacement Products. For greater certainty, Patheon’s responsibility for
any loss of API in defective Product will be captured and calculated in the API Yield under Section
2.2.




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          (b) Recalled Product. If a Recall or return results from, or arises out of, a failure
by Patheon to perform the Manufacturing Services in accordance with the Specifications, cGMPs, and
Applicable Laws, Patheon will be responsible for the documented out-of-pocket expenses of the
Recall or return and will use its commercially reasonable efforts to replace the Recalled or
returned Products with new Products, contingent upon the receipt from PGx of all API required for
the manufacture of the replacement Products. For greater certainty, Patheon’s responsibility for
any loss of API in Recalled Product will be captured and calculated in the API Yield under Section
2.2. If Patheon is unable to replace the Recalled or returned Products (except where this
inability results from a failure to receive the required API), then PGx may request Patheon to
reimburse PGx for the price that PGx paid to Patheon for Manufacturing Services for the affected
Products. In all other circumstances, Recalls, returns, or other corrective actions will be made
at PGx’s cost and expense.




          (c) Except as set forth in Sections 6.3(a) and (b) above, Patheon will not be liable to PGx
nor have any responsibility to PGx for any deficiencies in, or other liabilities associated with,
any Product manufactured by it, (collectively, “Product Claims”). For greater certainty, Patheon
will have no obligation for any Product Claims to the extent the Product Claim (i) is caused by
deficiencies in the Specifications, the safety, efficacy, or marketability of the Products or any
distribution thereof, (ii) results from a defect in a Component that is not reasonably discoverable
by Patheon using the test methods and qualification procedure set forth in the Quality Agreement
and Specifications, (iii) results from a defect in the API or Components supplied by PGx that is
not reasonably discoverable by Patheon using the test methods when implemented in accordance with
the Specifications, (iv) is caused by actions of third parties occurring after the Product is
shipped by Patheon under Section 5.4, (v) is due to packaging design or labelling defects or
omissions for which Patheon has no responsibility, (vi) is due to any unascertainable reason
despite Patheon having performed the Manufacturing Services in accordance with the Specifications,
cGMP’s, and Applicable Laws, or (vii) is due to any other breach by PGx of its obligations under
this Agreement.



6.4 Disposition of Defective or Recalled Products.




          PGx will not dispose of any damaged, defective, returned, or Recalled Products for which it
intends to assert a claim against Patheon without Patheon’s prior written authorization to do so.
Alternatively, Patheon may instruct PGx to return the Products to Patheon. Patheon will bear the
cost of disposition for any damaged, defective, returned or Recalled Products for which it bears
responsibility under Section 6.3. In all other circumstances, PGx will bear the cost of
disposition, including all applicable fees for Manufacturing Services, for any damaged, defective,
returned, or Recalled Products.



6.5 Healthcare Provider or Patient Questions and Complaints.




          PGx will have the sole responsibility for responding to questions and complaints from its
customers. Questions or complaints received by Patheon from PGx’s customers, healthcare providers
or patients will be promptly referred to PGx. Patheon will co-operate as reasonably required to
allow PGx to determine the cause of and resolve any questions and complaints. This assistance will
include follow-up investigations, including testing. In addition, Patheon will give PGx all
mutually agreed upon information that will enable PGx to respond properly to questions or
complaints about the Products as set forth in the Quality Agreement. Unless it is determined that
the cause of the complaint resulted from a failure by Patheon to perform the Manufacturing Services
in accordance with the Specifications, cGMPs, and Applicable Laws, all costs incurred under this
Section 6.5 will be borne by PGx.








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6.6 Sole Remedy.




          Except as otherwise set forth herein including indemnity set forth in Section 10.3 and subject
to the limitations set forth in Sections 10.1 and 10.2, the remedies described in this Article 6
will be PGx’s sole remedy for any failure by Patheon to provide the Manufacturing Services in
accordance with the Specifications, cGMPs, and Applicable Laws.




ARTICLE 7




CO-OPERATION



7.1 Quarterly Review.




          Each party hereby appoints one of its employees to be a relationship manager responsible for
liaison between the parties. The relationship managers will meet not less than quarterly to review
the current status of the business relationship and manage any issues that have arisen. The
relationship managers are as follows, or as may be otherwise designated by PGx or Patheon by
written notice to PGx or Patheon, as the case may be, from time to time:




PGxHealth:



Stephen Wald

Vice President, Technical Operations

swald@pgxhealth.com

(203) 786-3437




Patheon:



Migdalia Santiago

Business Manager

Migdalia.santiago@patheon.com

Office: +1 (787) 621-2500 ext. 4275

Cell: +1 (787) 378-7620



7.2 Governmental Agencies.




          Subject to Section 7.8 and the Confidentiality Agreement, each party may communicate with any
governmental agency, including but not limited to governmental agencies responsible for granting
regulatory approval for the Products, regarding the Products 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 any law, governmental order or regulation. Unless, in the reasonable opinion of
its counsel, there is a legal prohibition against doing so, a party will permit the other party to
accompany and take part in any communications with the agency, and to receive copies of all Product
communications to and from the agency related to this Agreement.



7.3 Records and Accounting by Patheon.




          Patheon will keep records of the manufacture, testing, and shipping of the Products, and
retain samples of the Products as are necessary to comply with manufacturing regulatory
requirements applicable to Patheon, as well as to assist with resolving Product complaints and
other similar investigations. Copies of the records and samples will be retained for a period of
one year following the date of Product expiry, or longer if required by law, at which time PGx will
be contacted concerning the






 - 18 - 









 






CONFIDENTIAL




delivery and destruction of the documents and/or samples of Products. PGx is responsible for
retaining samples of the Products necessary to comply with the legal/regulatory requirements
applicable to PGx.



7.4 Inspection.




          PGx may inspect Patheon reports and records relating to this Agreement during normal business
hours and with reasonable advance notice, but a Patheon representative must be present during the
inspection.



7.5 Access.




          Patheon will give PGx, and its agents or representatives, reasonable access at mutually
agreeable times to the areas of the Manufacturing Site in which the Products are manufactured,
stored, handled, or shipped to permit PGx to verify that the Manufacturing Services are being
performed in accordance with the Specifications, cGMPs, Quality Agreement and Applicable Laws;
provided, however, that any such agents or representatives must (i) be bound in writing to
obligations of confidentiality to PGx consistent with the terms of the Confidentiality Agreement
(which writing shall be provided to Patheon upon request) and (ii) not be an employee, agent, or
contractor of any business that is a competitor of Patheon (“competitor” herein meaning any
business that derives the majority of its revenues from the provision of pharmaceutical
manufacturing services). But, with the exception of “for-cause” audits, PGx will be limited each
Year to one cGMP-type audit, lasting no more than two days, and involving no more than four
auditors. [*] The right of access set forth in this Section 7.5 will not include a
right to access or inspect Patheon’s financial records.



7.6 Notification of Regulatory Inspections.




          Patheon will notify PGx within one Business Day of Patheon’s knowledge of any inspections,
whether scheduled or initiated, by any governmental agency specifically involving the Products.
Patheon will also promptly disclose to PGx any form 483’s, Establishment Inspection Reports or
warning letters or any other significant regulatory action which Patheon’s quality assurance group
determines could impact the regulatory status of the Products, such disclosure to be subject to the
Confidentiality Agreement.



7.7 Reports.




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



7.8 FDA Filings.




          (a) Regulatory Authority. PGx will have the sole responsibility for filing all
documents with all Regulatory Authorities and taking any other actions that may be required for the
receipt and/or maintenance of Regulatory Authority approval for the commercial manufacture of the
Products. Patheon will assist PGx, to the extent consistent with Patheon’s obligations under this
Agreement, to obtain



Certain
confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.




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Regulatory Authority approval for the commercial manufacture of all Products
as quickly as reasonably possible.




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




          (c) Verification of CMC. At least [*] days prior to filing with any Regulatory
Authority any documentation which is or is equivalent to the FDA’s Chemistry, Manufacturing and
Controls section (“CMC”) related to any Marketing Authorization, such as a New Drug Application or
Abbreviated New Drug Application, PGx will give Patheon a copy of those portions of the CMC
relating to this Agreement as well as any relevant supporting documents which have been relied upon
to prepare the CMC. This disclosure will permit Patheon to verify that the CMC accurately
describes the work that Patheon has performed and the manufacturing processes that Patheon will
perform under this Agreement. PGx will give Patheon copies of all FDA Product CMC filings at the
time of submission.




          (d) Deficiencies. If, in Patheon’s sole discretion, acting reasonably, Patheon
determines that any of the information given by PGx under clauses (b) and (c) above is inaccurate
or deficient in any manner whatsoever (the “CMC Deficiencies”), Patheon will notify PGx in writing
of the CMC Deficiencies. The parties will work together to have the CMC Deficiencies resolved
prior to any pre-approval inspection In the event the parties cannot resolve their differences on
the CMC Deficiencies, PGx shall make such regulatory filings at its own discretion and own risk as
to the matters of difference between Patheon and PGx.




          (e) PGx Responsibility. For clarity, the parties agree that in reviewing the
documents referred to in clause (b) above, Patheon’s role will be limited to verifying the accuracy
of the description of the work undertaken or to be undertaken by Patheon. Subject to the
foregoing, Patheon will not assume any responsibility for the accuracy of any application for
receipt of an approval by a regulatory authority. The PGx is solely responsibility for the
preparation and filing of the application for approval by the regulatory authorities and any
relevant costs will be borne by the PGx.




          (f) Inspection by Regulatory Authorities. If PGx does not give Patheon the documents
requested under clause (b) above 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.




ARTICLE 8




TERM AND TERMINATION


8.1 Term.




          This Agreement will become effective as of the Effective Date and will continue until December
31, 2015, unless terminated earlier by one of the parties in accordance herewith. The parties may
negotiate and/or renew the Agreement pursuant to mutual written accord.





Certain
confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.






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8.2 Termination for Cause.




          (a) Either party at its sole option may terminate this Agreement upon written notice where the
other party has failed to remedy a material breach of any of its representations, warranties, or
other obligations under this Agreement within 60 days following receipt of a written notice (the
“Remediation Period”) of the breach that expressly states that it is a notice under this Section
8.2(a) (a “Breach Notice”). The aggrieved party’s right to terminate this Agreement under this
Section 8.2(a) may only be exercised for a period of 60 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 deemed to have waived the breach of
the representation, warranty, or obligation described in the Breach Notice.




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




          (c) PGx may terminate this Agreement as to any Product upon 30 days’ prior written notice if
any Authority takes any action, or raises any objection, that prevents PGx from importing,
exporting, purchasing, or selling the Product. But if this occurs, PGx will still fulfill all of
its obligations under Section 8.4 below.




          (d) Patheon may terminate this Agreement upon twelve months’ prior written notice if PGx
assigns under Section 13.6 any of its rights under this Agreement to an assignee that is a
competitor of Patheon, meaning that such legal entity derives 50% or more of its revenues from
pharmaceutical contract manufacturing services.



8.3 Product Discontinuation.




          PGx will give at least three months’ advance notice if it intends to no longer order
Manufacturing Services for a Product due to this Product’s discontinuance in the market.



8.4 Obligations on Termination.




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





	 	(a)	 	Patheon shall immediately begin in good faith to mitigate all expenses.
	 
	 	(b)	 	PGx will take delivery of and pay for all undelivered Products that are
manufactured and/or packaged under a Firm Order, at the price in effect at the time the
Firm Order was placed;
	 
	 	(c)	 	PGx will purchase, at Patheon’s cost (including all costs incurred by Patheon
for the purchase and handling of the Inventory), the Inventory applicable to the
Products which was purchased, produced or maintained by Patheon in contemplation of
filling Firm Orders or in accordance with Section 5.2 prior to notice of termination
being given;




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	 	(d)	 	PGx will satisfy the purchase price payable under Patheon’s orders with
suppliers of Components, if the orders were made by Patheon in reliance on Firm
Orders or in accordance with Section 5.2;
	 
	 	(e)	 	Patheon will return to PGx all unused API (with shipping and related expenses,
if any, to be borne by PGx); and
	 
	 	(f)	 	PGx acknowledges that no competitor of Patheon will be permitted access to the
Manufacturing Site.
	 
	 	(g)	 	PGx will make commercially reasonable efforts, at its own expense, to remove from
Patheon site(s), within thirty Business Days, all of PGx’s Components, Inventory and
Materials that are specific to Product (whether current or obsolete), supplies,
undelivered Product, chattels, equipment or other moveable property owned by PGx,
related to the Agreement and located at a Patheon site or that is otherwise under
Patheon’s care and control (“PGx Property”). [*] Patheon will invoice PGx
for the storage charges as set forth in Section 5.6 of this Agreement.




Any termination or expiration of this Agreement will not affect any outstanding obligations or
payments due hereunder prior to the termination or expiration, nor will it prejudice any other
remedies that the parties may have under this Agreement. For greater certainty, termination of
this Agreement for any reason will not affect the obligations and responsibilities of the parties
under Articles 10 and 11 and Sections 5.4, 5.6, 8.4, 9.2, 9.3, 13.1, 13.2, 13.3, 13.15, and 13.16,
all of which survive any termination.




ARTICLE 9




REPRESENTATIONS, WARRANTIES AND COVENANTS


9.1 Authority.




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



9.2 PGx Warranties.




              As of the Effective Date, PGx represents and warrants that, to the best of its knowledge:





	 	(a)	 	Non-Infringement.






	 	(i)	 	the Specifications for each of the Products are its or its Affiliate’s
property and that PGx may lawfully disclose the Specifications to Patheon;
	 
	 	(ii)	 	any Client Intellectual Property, used by Patheon in performing the
Manufacturing Services according to the Specifications (A) is Client’s or its
Affiliate’s unencumbered property, (B) may be lawfully used as directed by
Client, and (C) does not infringe and will not infringe any Third Party Rights;






Certain
confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.




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	 	(iii)	 	as of the Effective Date, there are no actions or other legal
proceedings alleging that any of the Specifications, or any of the API and the
Components, or the sale,
	 
	 	 	 	use, or other disposition of any Product made in accordance with the
Specifications infringe Third Party Rights;






	 	(b)	 	Quality and Compliance.






	 	(i)	 	the Specifications for all Products conform to all applicable cGMPs
and Applicable Laws;
	 
	 	(ii)	 	the Products, if labelled and manufactured in accordance with the
Specifications and in compliance with applicable cGMPs and Applicable Laws (i)
may be lawfully sold and distributed in every jurisdiction in which PGx markets
the Products, (ii) will be fit for the purpose intended, and (iii) will be safe
for human consumption;
	 
	 	(iii)	 	on the date of shipment, the API will conform to the specifications
for the API that PGx has given to Patheon and that the API will be adequately
contained, packaged, and labelled and will conform to the affirmations of fact
on the container.




9.3 Patheon Warranties.




             Patheon covenants, represents, and warrants that:





	 	(a)	 	it will perform the Manufacturing Services in accordance with the Specifications,
cGMPs, Quality Agreement and Applicable Laws; and
	 
	 	(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)	 	API will not be used for any purpose other than as contemplated under this Agreement.




9.4 Debarred Persons.




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



9.5 Permits.




             PGx will be solely responsible for obtaining or maintaining, on a timely basis, any permits or
other regulatory approvals for the Products or the Specifications, including, without limitation,
all marketing and post-marketing approvals









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CONFIDENTIAL







          Patheon will maintain at all relevant times all governmental permits, licenses, approval, and
authorities required to enable it to lawfully and properly perform the Manufacturing Services.



9.6 No Warranty.




          NEITHER PARTY MAKES ANY WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW,
OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. PATHEON MAKES NO WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY FOR THE PRODUCTS.




ARTICLE 10




REMEDIES AND INDEMNITIES



     10.1 Consequential Damages.



     Under no circumstances whatsoever will either party be liable to the other in contract, tort,
negligence, breach of statutory duty, or otherwise for (i) any (direct or indirect) loss of
profits, of production, of anticipated savings, of business, or goodwill or (ii) for any other
liability, damage, costs, or expense of any kind incurred by the other party of an indirect or
consequential nature, regardless of any notice of the possibility of these damages.




     10.2 Limitation of Liability.



     (a) API. Except as expressly set forth in Section 2.2, under no circumstances will
Patheon be responsible for any loss or damage to the API. Patheon’s maximum responsibility for
loss or damage to the API will not exceed the Maximum API Liability set forth in Schedule D.




     (b) Maximum Liability. Except as set forth on 10.2(a), and except for claims or
damages arising out of Section 10.3 and Section 10.4, each party’s maximum liability under this
Agreement for any reason whatsoever, including, without limitation, resulting from any and all
breaches of its representations, warranties, or any other obligations under this Agreement will not
exceed [*].




     10.3 Patheon. 



          Patheon agrees to defend, indemnify, and hold PGx, its officers, employees, and agents
harmless against any and all losses, damages, costs, claims, demands, judgments and liability to,
from and in favour of third parties (other than Affiliates) resulting from any claim of personal
injury or property damage to the extent that the injury or damage is the result of (a) Patheon’s
negligence, wilful misconduct, or violation of the law, (b) services performed at the Manufacturing
Site, or (c) any breach by Patheon of this Agreement or the Quality Agreement, or any failure by
Patheon to perform the Manufacturing Services in accordance with this Agreement, the Quality
Agreement, the Specifications, cGMPs, and Applicable Laws except to the extent that the losses,
damages, costs, claims, demands, judgments, and liability are due to the negligence or wrongful
act(s) of PGx, its officers, employees, agents, or Affiliates.




          If a claim occurs, PGx will: (a) promptly notify Patheon of the claim; (b) use commercially
reasonable efforts to mitigate the effects of the claim; (c) reasonably cooperate with Patheon in
the




Certain
confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.





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CONFIDENTIAL






defense of the claim; and (d) at, PGx’s option, permit Patheon to control the defense and
settlement of the claim, all at Patheon’s cost and expense; provided, however, that Patheon shall
not settle any claim under which PGx is deemed to be at fault without PGx’s prior written consent.



10.4 PGx.




          PGx agrees to defend, indemnify, and hold Patheon, its officers, employees, and agents
harmless against any and all losses, damages, costs, claims, demands, judgments and liability to,
from and in favour of third parties (other than Affiliates) resulting from any claim of
infringement or alleged infringement of any Third Party Rights in the Products, or any portion
thereof, or any claim of personal injury or property damage to the extent that the injury or damage
is the result of a breach of this Agreement by PGx, including, without limitation, any
representation or warranty contained herein, except to the extent that the losses, damages, costs,
claims, demands, judgments, and liability are due to the negligence or wrongful act(s) of Patheon,
its officers, employees, or agents or due to Patheon’s breach of this Agreement or the Quality
Agreement.




          If a claim occurs, Patheon will: (a) promptly notify PGx of the claim; (b) use commercially
reasonable efforts to mitigate the effects of the claim; (c) reasonably cooperate with PGx in the
defense of the claim; and (d) permit PGx to control the defense and settlement of the claim, all at
PGx’s cost and expense.



10.5 Reasonable Allocation of Risk.




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




ARTICLE 11




CONFIDENTIALITY


11.1 Confidentiality.




          The Confidentiality Agreement will apply to all confidential information disclosed by the
parties under this Agreement. If the Confidentiality Agreement expires or is terminated prior to
the expiration or termination of this Agreement, the terms of the Confidentiality Agreement will
continue to govern the parties’ obligations of confidentiality for any confidential or proprietary
information disclosed by the parties hereunder, for the term of this Agreement, as though the
Confidentiality Agreement remained in full force and effect.




ARTICLE 12




DISPUTE RESOLUTION


12.1 Commercial Disputes.




          If any dispute arises out of this Agreement (other than a dispute under Section 6.1(b) or a
Technical Dispute, as defined herein), the parties will first try to resolve it amicably. In that
regard, any party may send a notice of dispute to the other, and each party will appoint, within
ten Business Days






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CONFIDENTIAL






from receipt of the notice of dispute, a single representative having full power and authority
to solve the dispute. The representatives will meet as necessary in order to resolve the dispute.
If the representatives fail to resolve the matter within one month from their appointment, or if a
party fails to appoint a representative within the ten Business Day period set forth above, the
dispute will immediately be referred to the Chief Operating Officer or Chief Commercial Officer (or
another officer as he/she may designate) of each party who will meet and discuss as necessary to
try to resolve the dispute amicably. Should the parties fail to reach a resolution under this
Section 12.1, the dispute will be referred to a court of competent jurisdiction in accordance with
Section 13.16.



12.2 Technical Dispute Resolution.




          If a dispute arises (other than disputes under Sections 6.1(b) or 12.1) between the parties
that is exclusively related to technical aspects of the manufacturing, packaging, labelling,
quality control testing, handling, storage, or other activities under this Agreement (a “Technical
Dispute”), the parties will make all reasonable efforts to resolve the dispute by amicable
negotiations. In that regard, senior representatives of each party will, as soon as practicable
and in any event no later than ten Business Days after a written request from either party to the
other, meet in good faith to resolve any Technical Dispute. If, despite this meeting, the parties
are unable to resolve a Technical Dispute within a reasonable time, and in any event within 30
Business Days of the written request, the Technical Dispute will, at the request of either party,
be referred for determination to an expert in accordance with Schedule E. If the parties cannot
agree that a dispute is a Technical Dispute, Section 12.1 will prevail. For greater certainty, the
parties agree that the release of the Products for sale or distribution under the applicable
marketing approval for the Products will not by itself indicate compliance by Patheon with its
obligations for the Manufacturing Services and further that nothing in this Agreement (including
Schedule E) will remove or limit the authority of the relevant qualified person (as specified by
the Quality Agreement) to determine whether the Products are to be released for sale or
distribution.




ARTICLE 13




MISCELLANEOUS


13.1 Inventions.




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




          (b) All Intellectual Property generated or derived by Patheon while performing the
Manufacturing Services, to the extent it is specific to the development, manufacture, use, and sale
of PGx’s Product that is the subject of the Manufacturing Services, will be the exclusive property
of PGx.



          (c) All Patheon Intellectual Property will be the exclusive property of Patheon. Patheon hereby
grants to PGx a perpetual, irrevocable, non-exclusive, paid-up, royalty-free, transferable license
to






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use the Patheon Intellectual Property used by Patheon to perform the Manufacturing Services to
enable PGx to manufacture the Product(s).




     (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 deemed to constitute improvements or other modifications of the
Products or processes or technology owned or otherwise controlled by the party.



13.2 Intellectual Property.




          Subject to Section 13.1, all PGx Intellectual Property will be owned by PGx and all Patheon
Intellectual Property will be owned by Patheon. 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.




13.3 Insurance.




          Each party will at its sole cost and expense 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. This insurance will have policy limits of not less
than [*] for each occurrence for bodily injury or property damage liability and
[*] in the aggregate per annum. Each party shall also maintain Products and Completed
Operations Liability insurance, either included within the General Liability policy or a separate
policy, with limits of not less than [*] for each occurrence for bodily injury or
property damage and [*] in the aggregate per annum. If any insurance required herein is
written on a claims-made basis, such insurance shall be required to be maintained for a period of
at least [*] years following its termination. Upon written request, each party will give
the other a certificate of insurance evidencing the above required policies and showing the name of
the issuing company, the policy number, the effective date, the expiration date, and the limits of
liability. All such insurance shall be placed with an insurer(s) having an A.M. Best rating of at
least A-, VIII. The insured Party will endeavour to further provide for a minimum of 30 days’
written notice to the insured of a cancellation of the insurance. If a party is unable to maintain
the insurance policies required under this Agreement, then the party will notify the other party in
writing within 60 days of such inability, and the parties will in good faith negotiate appropriate
amendments to the insurance provision of this Agreement or alternative risk financing in order to
provide adequate assurances.




13.4 Independent Contractors.




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




Certain confidential information contained in this document, marked by brackets, has been omitted 

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the 

Securities Exchange Act of 1934, as amended.



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13.5 No Waiver.




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




13.6 Assignment.





	 	(a)	 	Patheon may not assign this Agreement or any of its rights or obligations
hereunder without the written consent of PGx, this consent not to be unreasonably
withheld. But Patheon may arrange for subcontractors to perform specific testing
services arising under this Agreement in accordance with the Quality Agreement.
	 
	 	(b)	 	Subject to Section 8.2(d), PGx may assign this Agreement or any of its rights
or obligations hereunder without approval from Patheon. PGx will give Patheon prior
written notice of any assignment and any assignee will covenant in writing with Patheon
to be bound by the terms of this Agreement. Any partial assignment will be subject to
Patheon’s cost review of the assigned Products and Patheon may terminate this Agreement
or any assigned part thereof, on 12 months’ prior written notice to PGx and the
assignee if good faith discussions do not lead to agreement on amended Manufacturing
Service fees within a reasonable time.
	 
	 	(c)	 	Despite the foregoing provisions of this Section 13.6, either party may assign
this Agreement to any of its Affiliates or to a successor to (by merger, stock sale, or
other similar transaction) 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 hereunder. Patheon shall ensure that
any successor to Patheon’s manufacturing capabilities shall agree in writing to supply
Product to PGx under the terms of this Agreement and otherwise to perform Patheon’s
obligations under this Agreement.





13.7 Force Majeure.




          Neither party will be liable for the failure to perform its obligations under this 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, fires, floods, storms, interruption of or delay in
transportation, defective equipment, lack of or inability to obtain fuel, power or components, or
compliance with any order or regulation of any government entity acting within colour of right (a
“Force Majeure Event”). A party claiming a right to excused performance under this Section 13.7
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.




13.8 Additional Product.




          Additional products may be added to this Agreement and the additional products will be
governed by the general conditions hereof with any special terms (including, without limitation,
price) governed by amendments to Schedules A, B, and C as applicable.







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13.9 Notices.




          Any notice, approval, instruction or other written communication required or permitted
hereunder will be sufficient if made or given to the other party by personal delivery, by telecopy,
facsimile communication, or confirmed receipt email or by sending the same by first class mail,
postage prepaid to the respective addresses, telecopy or facsimile numbers or electronic mail
addresses set forth below:




If to PGx:




PGxHealth, LLC

c/o Clinical Data, Inc.

One Gateway Center, Suite 702

Newton, Massachusetts 02458

Attn: Chief Legal Officer

Telecopier No.: 617.663.6458

Email address: mlevine@clda.com




If to Patheon:




Patheon Puerto Rico, Inc.

P.O. Box 31199

Manati, PR 00725

Attention: Legal Department

Telecopier No.: 787.258.1794

Email address: Joanna. Bocanegra@patheon.com




With a copy to:




Patheon Inc.

4721 Emperor Boulevard

Research Triangle Park,

NC 27703

Attention: General Counsel

Telecopier No.: 919-474-2269

Email address: Doaa.Fathallah@patheon.com



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




13.10 Severability.




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






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13.11 Entire Agreement.




          This Agreement, together with the Quality Agreement and the Confidentiality Agreement,
constitutes the full, complete, final and integrated agreement between the parties relating to the
subject matter hereof and supersedes all previous written or oral negotiations, commitments,
agreements, transactions, or understandings concerning the subject matter hereof. Notwithstanding
the foregoing, those certain terms and conditions with an effective date of September 20, 2006
shall continue in full force and effect with respect to work performed under such terms and
conditions. Any modification, amendment, or supplement to this Agreement must be in writing and
signed by authorized representatives of both parties. In case of conflict, the prevailing order of
documents will be this Agreement, the Quality Agreement, and the Confidentiality Agreement.




13.12 Other Terms.




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




13.13 No Third Party Benefit or Right.




          For greater certainty, nothing in this Agreement 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.




13.14 Execution in Counterparts.




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




13.15 Use of PGx Name.




          Patheon will not make any use of PGx’s name, trademarks or logo or any variations thereof,
alone or with any other word or words, without the prior written consent of PGx.




13.16 Governing Law.




          This Agreement will be construed and enforced in accordance with the laws of the State of
Delaware and the laws of the United States of America applicable therein and subject to the
exclusive jurisdiction of the courts thereof. The UN Convention on Contracts for the International
Sale of Goods will not apply to this Agreement.






- 30 -









 








CONFIDENTIAL




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




	 	 	 	 	 
	 	PATHEON PUERTO RICO, INC.

 	 
	 	By:  	/s/ Francisco R. Negron
 	 
	 	 	Name:  	Francisco R. Negron  	 
	 	 	Title:  	Vice President 	 
	 
	 	PATHEON PHARMACEUTICALS INC.

 	 
	 	By:  	/s/ Geoff Glass
 	 
	 	 	Name:  	Geoff Glass 	 
	 	 	Title:  	EVP 	 
	 
	 	PGxHEALTH, LLC



By PGxHealth Holding, Inc., its sole Member

 	 
	 	By:  	/s/ C. Evan Ballantyne
 	 
	 	 	C. Evan Ballantyne 	 
	 	 	EVP and Chief Financial Officer 	 
	 
	 	PGxHEALTH, LLC




By PGxHealth Holding, Inc., its sole Member

 	 
	 	By:  	/s/ Caesar J. Belbel
 	 
	 	 	Caesar J. Belbel 	 
	 	 	EVP and Chief Legal Officer 	 



- 31 -









 






	 	 	 	 	 



CONFIDENTIAL




SCHEDULE A




PRODUCT LIST AND SPECIFICATIONS 




Product List




	 	 	 	 	 	 	 
	 	 	Tablet Strength	 	 
	Product #	 	(Mg)	 	Presentation/Packaging
	1

	 	 	40	 	 	30 ct. Bottle
	2

	 	 	40	 	 	90 ct. Bottle
	3

	 	 	40	 	 	500 ct. Bottle
	4

	 	 	40	 	 	Bulk Packaging
	5

	 	 	20	 	 	30 ct. Bottle
	6

	 	 	20	 	 	90 ct. Bottle
	7

	 	 	20	 	 	500 ct. Bottle
	8

	 	 	20	 	 	Bulk Packaging
	9

	 	 	10	 	 	30 ct. Bottle
	10

	 	 	10	 	 	90 ct. Bottle
	11

	 	 	10	 	 	500 ct. Bottle
	12

	 	 	10	 	 	Bulk Packaging






Specifications



If the Specifications are subsequently amended, then PGx will give Patheon the revised and
originally executed copies of the revised Specifications. Upon acceptance of the revised
Specifications, Patheon will give PGx a signed and dated receipt indicating Patheon’s acceptance,
not to be unreasonably withheld of the revised Specifications.



[*]




Certain confidential information contained in this document, marked by brackets, has been omitted 

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the 

Securities Exchange Act of 1934, as amended.



- 1 -









 





CONFIDENTIAL




SCHEDULE B




MINIMUM RUN QUANTITY, ANNUAL VOLUME, AND PRICE 



[*]




Certain confidential information contained in this document, marked by brackets, has been omitted 

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.









- 2 -









 








CONFIDENTIAL




SCHEDULE C




ANNUAL STABILITY TESTING 



If requested by PGx, Patheon and PGx will agree in writing on any stability testing to be performed
by Patheon on the Products. This agreement will specify the commercial and Product stability
protocols applicable to the stability testing and the fees payable by PGx for this testing.











- 3 -









 








CONFIDENTIAL




SCHEDULE D




ACTIVE MATERIALS




	 	 	 
	Active Materials	 	Supplier
	vilazodone HCl

	 	ScinoPharm Taiwan, Ltd.






API CREDIT VALUE



[*]




MAXIMUM API LIABILITY



Patheon’s liability for API calculated in accordance with Section 2.2 of the Agreement in a Year
will not exceed, in the aggregate, the Maximum API Liability set forth below:




     [*]



Certain confidential information contained in this document, marked by brackets, has been omitted 

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.











- 1 -














 





CONFIDENTIAL




SCHEDULE E




TECHNICAL DISPUTE RESOLUTION



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



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



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



3. Not Arbitrator. No expert will be deemed to be an arbitrator and the provisions of the American Arbitration Act or of any other
applicable statute (foreign or domestic) and the law relating to arbitration will not apply to the expert or the expert’s determination or
the procedure by which the expert reaches his determination under this Schedule E.



4. Procedure. Where an expert is appointed:





	 	(a)	 	Timing. The expert will be so appointed on condition that (i) he promptly fixes a reasonable time and place for receiving representations,
submissions or information from the parties and that he issues the authorizations to the parties and any relevant third party for the proper conduct
of his determination and any hearing and (ii) he renders his decision (with full reasons) within 15 Business Days (or another other date as the parties
and the expert may agree) after receipt of all information requested by him under Paragraph 4(b) hereof.
	 
	 	(b)	 	Disclosure of Evidence. The parties undertake one to the other to give to any expert all the evidence and information within their respective
possession or control as the expert may reasonably consider necessary for determining the matter before him which they will disclose promptly and in any
event within five Business Days of a written request from the relevant expert to do so.
	 
	 	(c)	 	Advisors. Each party may appoint any counsel, consultants and advisors as it feels appropriate to assist the expert in his determination and
so as to present their respective cases so that at all times the parties will co-operate and seek to narrow and limit the issues to be determined.
	 
	 	(d)	 	Appointment of New Expert. If within the time specified in Paragraph 4(a) above the expert will not have rendered a decision in accordance
with his appointment, a new expert may (at the request of either party) be appointed and the appointment of the existing expert will thereupon cease for
the purposes of determining the matter at issue




- 2 -









 











CONFIDENTIAL





	 	 	 	between the parties save this if the existing expert renders his decision with
full reasons prior to the appointment of the new expert, then this decision will
have effect and the proposed appointment of the new expert will be withdrawn.
	 
	 	(e)	 	Final and Binding. The determination of the expert will, except for
fraud or manifest error, be final and binding upon the parties.
	 
	 	(f)	 	Costs. Each party will bear its own costs for any matter referred to
an expert hereunder and, in the absence of express provision in the Agreement to the
contrary, the costs and expenses of the expert will be shared equally by the parties.




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









- 3 -









 








CONFIDENTIAL




SCHEDULE F




COMMERCIAL QUALITY AGREEMENT




[*]




Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the

Securities Exchange Act of 1934, as amended.







 









 








CONFIDENTIAL




SCHEDULE G 




[Reserved]








- 2 -









 









SCHEDULE H




QUARTERLY ACTIVE MATERIALS INVENTORY REPORT



	 	 	 

	TO:

	 	PGxHEALTH, LLC
	 
	 	 
	FROM:

	 	PATHEON PUERTO RICO, INC.
	 
	 	 
	RE:

	 	Active Materials (“API”) quarterly inventory report under Section
2.2(a) of the Manufacturing Services Agreement dated • (the
“Agreement”)






	 	 	 	 	 	 	 

	Reporting quarter:

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	API on hand
at beginning of quarter:

	 	 

	 	kg
	 	(A)
	 
	 	 	 	 	 	 
	API on hand
at end of quarter:

	 	 

	 	kg
	 	(B)
	 
	 	 	 	 	 	 
	Quantity Received during quarter:

	 	 

	 	kg
	 	(C)
	 
	 	 	 	 	 	 
	Quantity
Dispensed1 during quarter:
(A + C – B)

	 	 

	 	kg	 	 
	 
	 	 	 	 	 	 
	Quantity Converted during quarter:

	 	 

	 	kg	 	 
	(total API in Products produced
and not rejected, recalled or returned)
	 	 	 	 	 	 





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




			
	 	 	 
	PATHEON PUERTO RICO, INC.
	 	DATE:           
                 
             
	 	 	 





Per:


        Name:

        Title:






 




	
	Excludes any (i) Active Materials this must be retained by
Patheon as samples, (ii) Active Materials contained in Product this must be
retained as samples, (iii) Active Materials used in testing (if applicable),
and (iv) Active Materials received or consumed in technical transfer activities
or development activities, including, without limitation, any regulatory,
stability, validation, or test batches manufactured during the month.




 









 











SCHEDULE I




REPORT OF ANNUAL ACTIVE MATERIALS INVENTORY RECONCILIATION AND CALCULATION

OF ACTUAL ANNUAL YIELD



	 	 	 

	TO:

	 	PGxHEALTH, LLC
	 
	 	 
	FROM:

	 	PATHEON PUERTO RICO, INC.
	 
	 	 
	RE:

	 	API annual inventory reconciliation report and calculation of Actual
Annual Yield under Section 2.2(a) of the Manufacturing Services
Agreement dated • (the “Agreement”)






	 	 	 	 	 	 	 	 	 	 	 

	[*]
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	kg
	 	 	(A	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	kg
	 	 	(B	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	kg
	 	 	(C	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	kg
	 	 	(D	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	kg
	 	 	(E	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	$	 	 	/ kg
	 	 	(F	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	%	 	 	 	(G	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	 	 	 	%	 	 	 	(H	)
	 
	 	 	 	 	 	 	 	 	 	 
	[*]

	$	 
	 	 	 	 	 		(I	)
	 

	(if a negative number, insert zero)
	 	 	 	 	 			
	 
	 	 	 	 	 	 	 	 	 	 
	[*].
	 	 	 	 	 	 	 	 	 	 





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



DATE:         
                  
              




PATHEON PUERTO RICO, INC.




Per:


        Name:

        Title:





Certain confidential information contained in this document, marked by brackets, has been omitted

and filed separately with the Securities and Exchange Commission pursuant to Rule
 24b-2 of the

Securities Exchange Act of 1934, as amended.