exv10w4






Exhibit 10.4



CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.




Execution Copy







Manufacturing Services Agreement




May 26, 2010










 









 








Table of Contents




	 	 	 	 	 

	ARTICLE 1
	 	 	1	 
	 
	 	 	 	 
	INTERPRETATION
	 	 	1	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	1	 
	1.2 Currency
	 	 	4	 
	1.3 Sections and Headings
	 	 	5	 
	1.4 Singular Terms
	 	 	5	 
	1.5 Schedules
	 	 	5	 
	 
	 	 	 	 
	ARTICLE 2
	 	 	6	 
	 
	 	 	 	 
	PATHEON’S MANUFACTURING SERVICES
	 	 	6	 
	 
	 	 	 	 
	2.1 Manufacturing Services
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 3
	 	 	9	 
	 
	 	 	 	 
	CLIENT’S OBLIGATIONS
	 	 	9	 
	 
	 	 	 	 
	3.1 Payment
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 4
	 	 	10	 
	 
	 	 	 	 
	CONVERSION FEES AND COMPONENT COSTS
	 	 	10	 
	 
	 	 	 	 
	4.1 First Year Pricing
	 	 	10	 
	4.2 Price Adjustments — Subsequent Years’ Pricing
	 	 	10	 
	4.3 Price Adjustments — Current Year Pricing
	 	 	11	 
	4.4 Adjustments Due to Technical Changes
	 	 	12	 
	4.5 Multi-Country Packaging Requirements.
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 5
	 	 	13	 
	 
	 	 	 	 
	ORDERS, SHIPMENT, INVOICING, PAYMENT
	 	 	13	 
	 
	 	 	 	 
	5.1 Orders and Forecasts
	 	 	13	 
	5.2 Reliance by Patheon
	 	 	14	 
	5.3 Minimum Orders
	 	 	15	 
	5.4 Shipments
	 	 	15	 
	5.5 On Time Delivery
	 	 	15	 
	5.6 Invoices and Payment
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 6
	 	 	16	 
	 
	 	 	 	 
	PRODUCT CLAIMS AND RECALLS
	 	 	16	 
	 
	 	 	 	 
	6.1 Product Claims
	 	 	16	 
	6.2 Product Recalls and Returns
	 	 	17	 






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	6.3
Patheon’s Responsibility for Defective and Recalled Products
	 	 	17	 
	6.4 Disposition of Defective or Recalled Products
	 	 	18	 
	6.5 Healthcare Provider or Patient Questions and Complaints
	 	 	18	 
	6.6 Sole Remedy
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 7
	 	 	19	 
	 
	 	 	 	 
	CO-OPERATION
	 	 	19	 
	 
	 	 	 	 
	7.1 Quarterly Review
	 	 	19	 
	7.2 Governmental Agencies
	 	 	19	 
	7.3 Records and Accounting by Patheon
	 	 	19	 
	7.4 Inspection
	 	 	19	 
	7.5 Access
	 	 	19	 
	7.6
Notification of Regulatory Inspections
	 	 	20	 
	7.7 Reports
	 	 	20	 
	7.8 FDA Filings
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 8
	 	 	21	 
	 
	 	 	 	 
	TERM AND TERMINATION
	 	 	21	 
	 
	 	 	 	 
	8.1 Initial Term
	 	 	21	 
	8.2 Termination for Cause
	 	 	21	 
	8.3 Product Discontinuation
	 	 	22	 
	8.4 Obligations on Termination
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 9
	 	 	23	 
	 
	 	 	 	 
	REPRESENTATIONS, WARRANTIES AND COVENANTS
	 	 	23	 
	 
	 	 	 	 
	9.1 Authority
	 	 	23	 
	9.2 Client Warranties
	 	 	23	 
	9.3 Patheon Warranties
	 	 	24	 
	9.4 Debarred Persons
	 	 	25	 
	9.5 Permits
	 	 	25	 
	9.6 No Warranty
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 10
	 	 	25	 
	 
	 	 	 	 
	REMEDIES AND INDEMNITIES
	 	 	25	 
	 
	 	 	 	 
	10.1 Consequential Damages
	 	 	25	 
	10.2 Limitation of Liability
	 	 	25	 
	10.3 Patheon
	 	 	26	 
	10.4 Client
	 	 	26	 
	10.5 Reasonable Allocation of Risk
	 	 	26	 






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	ARTICLE 11
	 	 	27	 
	 
	 	 	 	 
	CONFIDENTIALITY
	 	 	27	 
	 
	 	 	 	 
	11.1 Confidentiality
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 12
	 	 	27	 
	 
	 	 	 	 
	DISPUTE RESOLUTION
	 	 	27	 
	 
	 	 	 	 
	12.1 Commercial Disputes
	 	 	27	 
	12.2 Technical Dispute Resolution
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 13
	 	 	28	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	28	 
	 
	 	 	 	 
	13.1 Inventions
	 	 	28	 
	13.2 Intellectual Property
	 	 	28	 
	13.3 Insurance
	 	 	28	 
	13.4 Independent Contractors
	 	 	29	 
	13.5 No Waiver
	 	 	29	 
	13.6 Assignment
	 	 	29	 
	13.7 Force Majeure
	 	 	29	 
	13.8 Additional Product
	 	 	30	 
	13.9 Notices
	 	 	30	 
	13.10 Severability
	 	 	31	 
	13.11 Entire Agreement
	 	 	31	 
	13.12 Other Terms
	 	 	31	 
	13.13 No Third Party Benefit or Right
	 	 	32	 
	13.14 Execution in Counterparts
	 	 	32	 
	13.15 Use of Client Name
	 	 	32	 
	13.16 Governing Law
	 	 	32	 






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MANUFACTURING SERVICES AGREEMENT 




          THIS MANUFACTURING SERVICES AGREEMENT (the “Agreement”) is made as of May 26, 2010 (the
“Effective Date”)



B E T W E E N:




PATHEON PHARMACEUTICALS INC.,

a corporation existing under the laws of the State of Delaware




(“ Patheon”),




- and -




WYTHE PHARMACEUTICALS, INC. D/B/A S2 THERAPEUTICS,

a corporation existing under the laws of Tennessee




(“ Client”).




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




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;




“Active Materials Credit Value” means the value of the Active Materials 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




 









 






	 	(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 Client 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 the federal laws of the United States, and (i) for Patheon, the Laws of
State of Ohio, being the jurisdiction where the Manufacturing Site is located; and (ii) for Client
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;




“Bill Back Items” means the expenses for all third party supplier fees for the purchase of columns,
standards, tooling, PAPR or PPE suits (where applicable), RFID tags and supporting equipment, and
other project specific items necessary for Patheon to perform the Manufacturing Services, and which
are not included as Components;




“Business Day” means a day other than a Saturday, Sunday or a day that is a statutory holiday in
the State of Ohio;




“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 manufacturing and quality control practice, all as updated, amended and revised from
time to time;




“Client Intellectual Property” means Intellectual Property owned or licensed by Client before
entering into this Agreement, or generated or derived 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, Client’s Active Material or Product;




“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 Active Materials;




“Confidentiality Agreement” means the agreement about the non-disclosure of confidential
information between Patheon, VeroScience LLC, Arisaph Pharmaceuticals, Inc., and Client dated
October 19, 2009;



-2-









 






“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(d);




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




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




“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 about 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 for the manufacture of the Products but, for greater certainty, does not include
the Active Materials;




“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 the manufacturing, quality control, quality assurance,
stability testing, packaging, and related services, set forth in this Agreement, required
to manufacture Product or Products from Active Materials and Components;




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




“Materials” means all Components, Bill Back Items, and other materials used to manufacture
the Product other than Active Materials;




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




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




“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, Client’s
Active Material or Product 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
requirements of the Product(s);



-3-









 







“Price” means the price measured in US Dollars to be charged by Patheon for performing the
Manufacturing Services, and includes the cost of Components, certain cost items as set
forth in Schedule B, and annual stability testing costs as set forth in Schedule C;




“Product(s)” means Cycloset® (bromocriptine mesylate) Tablets approved by FDA under NDA No.
20,866;




“Quality Agreement” means the agreement (the form of which is set forth in Schedule F)
between the parties setting out the quality assurance standards for the Manufacturing
Services to be performed by Patheon for Client;




“Regulatory Authority” means the FDA and any other foreign regulatory agencies competent to
grant marketing approvals for, and otherwise regulate, pharmaceutical products including
the Products in the Territory;




“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, which is given by Client to Patheon in
accordance with the procedures listed in Schedule A and which contains documents relating
to each Product, including, without limitation:




	 	(a)	 	specifications for Active Materials and Components;
	 
	 	(b)	 	manufacturing specifications, directions, and processes;
	 
	 	(c)	 	storage requirements;
	 
	 	(d)	 	all environmental, health and safety information for each the Product including
material safety data sheets; and
	 
	 	(e)	 	the finished Product specifications (“Finished Product Specifications”), packaging
specifications and shipping requirements for each Product;






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




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




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




“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.








-4-









 








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.



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
	 	-
	 	Active Materials, Active Materials Credit Value, and Maximum Credit
Value
	 

	 	Schedule E
	 	-
	 	Technical Dispute Resolution
	 

	 	Schedule F
	 	-
	 	Commercial Quality Agreement
	 

	 	Schedule G
	 	-
	 	(Reserved)
	 

	 	Schedule H
	 	-
	 	Quarterly Active Materials Inventory Report
	 

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

	 	Schedule J
	 	-
	 	(Reserved)







-5-











 





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 Client. 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 the Client. Patheon may
change the Manufacturing Site for the Products only with the prior written consent of Client, this
consent not to be unreasonably withheld. 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 manufacture at least [***]% of the Products offered for sale by Client in the
Territory so long as Patheon is in material compliance with its obligations to Client under this
Agreement (including without limitation satisfying all orders placed by Client in accordance with
the provisions of this Agreement), the Quality Agreement and the Capital Expenditure and Equipment
Agreement and is fully in compliance with all Applicable Laws. In performing the Manufacturing
Services, Patheon and Client agree that:





	 	(a)	 	Conversion of Active Materials and Components. Patheon will convert Active
Materials 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 Client 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 Client, it will give
Client a certificate of analysis and certificate of compliance including a statement that
the batch has been manufactured and tested in accordance with Specifications, cGMPs, and
Applicable Laws. Client 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. Specific Product related information contained in those batch documents is
Client property.
	 
	 	(c)	 	Components. Patheon will purchase and test all Components (with the exception
of those that are supplied by Client) at Patheon’s expense and as required by the
Specifications.
	 
	 	(d)	 	Stability Testing. 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 each set out in Schedule C. Patheon will not make any changes to these testing
protocols without prior written approval from Client. If a confirmed stability test failure
occurs, Patheon will notify Client within [***], after which Patheon and Client 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







 




			
	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




- 6 -









 











	 	 	 	accordance with the Specifications, cGMPs, and Applicable Laws. Patheon will give
Client all stability test data and results at Client’s request.
	 
	 	(e)	 	Packaging. Patheon will package the Products as set out in the Specifications.
Client will be responsible for the cost of artwork development. 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. Client may, in its sole
discretion, make changes to labels, product inserts, and other packaging for the Products.
Those changes will be submitted by Client to all applicable governmental agencies and other
third parties responsible for the approval of the Products. Client 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)	 	Active Materials and Client Supplied Components Importing. Except for the
manufacturing of commercial launch quantities of Product, Client will deliver the Active
Materials to the Manufacturing Site DDP (Incoterms 2000) at least [***] before the
scheduled production date in quantities sufficient for Patheon to manufacture the desired
quantities of Product and to ship Product on the Delivery Date. In the case of the
manufacturing of commercial launch quantities of Product, the time period will [***] prior
to the scheduled production date. If the Active Materials are not received [***] (as the
case may be) before the scheduled production date, Patheon may delay the shipment of
Product by the same number of days as the delay in receipt of the Active Materials. 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 as agreed
to by the parties. All shipments of Active Material will be accompanied by certificate(s)
of analysis from the Active Material manufacturer, confirming the identity and purity of
the Active Materials and its compliance with the Active Material specifications.
	 
	 	(g)	 	Bill Back Items. Bill Back Items will be charged to Client at Patheon’s cost
plus a [***] handling fee.
	 
	 	(h)	 	Product Rejection for Finished Product Specification Failure. Internal process
specifications will be defined and mutually agreed upon, to the extent the same differ from
the Specifications. If Patheon manufactures Product in accordance with the agreed upon
process specifications, the Specifications, cGMPs, Applicable Laws and the terms and
conditions of this Agreement, and a batch or portion of batch of Product does not meet the
Finished Product Specifications, Client will not reject the non-conforming Product solely
on account of such failure to meet the Finished Product Specifications.
	 
	 	(i)	 	Client will have the right, at any time, to contract with, and obtain regulatory
approval, for regulatory qualified back-up vendor. As reasonably requested by Client and at
Client’s cost, Patheon will provide technology transfer and assistance to enable Client’s
back-up Vendor to manufacture the Product for Client.







 




			
	***	 	Certain information on this page has been omitted and filed separately with the Securities and
Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




- 7 -









 









	 	(j)	 	Patheon agrees that, so long as Patheon manufactures [***] of the Products offered for
sale by Client in the Territory, Patheon will not manufacture bromocriptine mesylate
products, regardless of dosage form, for any other third party without the express written
consent of Client.





2.2 Active Material Yield.





	 	(a)	 	Reporting. Patheon will give Client a quarterly inventory report of
the Active Materials 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 Active Materials that complies with the
Specifications and is received at the Manufacturing Site during the applicable
period.
	 
	 	 	 	Quantity Dispensed: The total quantity of Active Materials dispensed at the
Manufacturing Site during the applicable period. The Quantity Dispensed is
calculated by adding the Quantity Received to the inventory of Active Materials
that complies with the Specifications held at the beginning of the applicable
period, less the inventory of Active Materials that complies with the
Specifications held at the end of the period. The Quantity Dispensed will only
include Active Materials received and dispensed in commercial manufacturing of
Products and, for certainty, will not include any (i) Active Materials that must be
retained by Patheon as samples, (ii) Active Materials contained in Product that
must be retained as samples, (iii) Active Materials used in testing (if
applicable), and (iv) Active Materials 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 Active Materials 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 [***] after the end of each Year, Patheon will prepare an annual
reconciliation of Active Materials 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 [***] at the Manufacturing Site (collectively,
the “Target Yield Determination Batches”), the Parties will mutually agree on the target yield for
the Product at the Manufacturing Site (each, a







 




			
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and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




- 8 -









 











	 	 	 	“Target Yield”); The Target Yield will be revised annually to reflect the actual
manufacturing experience as agreed to by the parties.
	 
	 	(b)	 	Shortfall Calculation. If the Actual Annual Yield falls more than five 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 – [***]%) – AAY] * Active Materials Credit Value *
Quantity Dispensed
	 
	 	(c)	 	Credit for Shortfall. If there is a Shortfall for a Product in a
Year, then Patheon will credit Client’s account for the amount of the Shortfall not
later than [***] 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
Client. The Annual Shortfall, if any, will be disclosed by Patheon on the
reconciliation report form.
	 
	 	(d)	 	Maximum Credit. Patheon’s liability for Active Materials calculated in
accordance with this Section 2.2 in a Year will not exceed, in the aggregate, the
Maximum Credit Value set forth in Schedule D.
	 
	 	(e)	 	Material Breach. It will be not be considered a material breach of this
Agreement by Patheon under Section 8.2(a) if the Actual Annual Yield is less than the
Target Yield; provided however that if any year, Patheon’s liability for Active Materials
would exceed the Maximum Credit Value, then Client may terminate this Agreement for
material breach under Section 8.2(a).





ARTICLE 3




CLIENT’S OBLIGATIONS



3.1 Payment.



Client 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. Client will also pay Patheon for any Bill Back Items.




3.2 Active Materials.




          Client will at its sole cost and expense, deliver the Active Materials 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 Active Materials will be held by Patheon on
behalf of Client as set forth in this Agreement. Title to the Active Materials will at all times
remain the property of Client.






 




			
	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.




- 9 -









 









Patheon shall store and handle the Active Materials in accordance with Specifications provided by
the Client. Patheon will store the Active Materials in accordance with cGMPs and industry standards
in a manner reasonably sufficient to prevent cross-contamination with Patheon’s other assets and
marked with the name of the manufacturer and a unique identification number. Within [***] of
opening the packaged Active Materials, Patheon shall notify Client in writing of any physical
damage, quantity discrepancies, or other defects of which Patheon becomes aware relating to the
Active Materials, and Patheon shall comply with Client’s instructions regarding the disposition of
any such defective Active Materials. Any Active Materials 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 the first Year of the Agreement, Patheon may adjust the Price effective January
1st of each Year as follows:





	 	(a)	 	Manufacturing Costs. Patheon may adjust the Price for inflation, based upon the
preliminary number for any increase in the Producer Price Index pcu325412325412 for
Pharmaceutical Preparation Manufacturing (“PPI”) published by the United States Department
of Labor, Bureau of Labor Statistics in August of the preceding Year compared to the final
number for the same month of the Year prior to that, unless the parties otherwise agree in
writing. Notwithstanding the foregoing, Patheon’s right to adjust the Price pursuant to
this Section 4.2(a) shall apply only to labor and overhead expenses incorporated into the
Price, and no other elements of the Price (including without limitation the cost of
Components, which are addressed exclusively in Section 4.2(b)) may be adjusted pursuant to
this Section 4.2(a). On or about [***] of each Year, Patheon will give Client a statement
setting forth the calculation for the inflation adjustment to be applied in calculating the
Price for the next Year.
	 
	 	(b)	 	Component Costs. If Patheon incurs an increase in Component costs during the
Year, it may increase the Price for the next Year to pass through the additional Component
costs.On or about [***] of each Year, Patheon will give Client information about the
increase in Component costs which will be applied to the calculation of the Price for the
next Year to reasonably demonstrate that the Price increase is justified. Patheon will not
be required to give information to Client that is subject to obligations of confidentiality
between Patheon and its suppliers.
	 
	 	(c)	 	Pricing Basis. Client acknowledges that the Price in any Year is quoted based
upon the Minimum Run Quantity and the price tiers specified in Schedule B. The Price is
subject







 




			
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	 	 	 	to change if the specified Minimum Run Quantity changes or if the minimum Annual
Volume in the lowest tier is not ordered in a Year. For greater certainty, if
Patheon and Client agree that the Minimum Run Quantity will be reduced or the
minimum Annual Volume in the lowest tier will not be ordered in a Year whether as a
result of a decrease in estimated annual volume or otherwise and, as a result of
the reduction, Patheon demonstrates to Client that its costs to perform the
Manufacturing Services or to acquire the Materials for the Product will increase on
a per unit basis (including the amount of the increase), then Patheon may increase
the Price by an amount sufficient to absorb the documented increased costs. On or
about [***] of each Year, Patheon will give Client 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 Client that is subject to
obligations of confidentiality between Patheon and its suppliers, if, after good
faith efforts, Patheon is unable to obtain permission from suppliers to provide
supporting documents to Client where Client is willing to be bound by the same
obligations as Patheon with respect to confidentiality. The provisions of this
Section 4.2(c) constitute the sole and exclusive remedy of Patheon, and the sole
and exclusive liability of Client, with respect to any failure to meet the Annual
Volume.
	 
	 	(d)	 	Process Improvement Efforts. Patheon continually works to improve its
processes to eliminate waste, improve cost efficiencies, deliver product as promised and
adhere to strict quality standards. Patheon believes in the continuous improvement of its
performance, which led Patheon to create the Patheon Advantage program. Patheon Advantage
incorporates Lean6Sigma to identify opportunities and implement changes to maximize the
efficiency of Patheon’s processes. If any such improvement efforts result in quantifiable
reductions in costs in providing the Services contemplated under this Agreement Patheon
shall promptly notify Client of such reductions, and the Price hereunder shall be reduced
by [***]% of the cost reduction from and after the date of such notice.





             For all Price adjustments under this Section 4.2, Patheon will deliver to Client on or about
[***] of each Year a revised Schedule B to be effective for the next Year. No Price increases will
be made hereunder until [***].




4.3 Price Adjustments — Current Year Pricing.




             During any Year of this Agreement, the Prices set out in Schedule B will be adjusted 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 to an adjustment to the Price for any affected Product to compensate it
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







 




			
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	 	 	adjustments set out in (i) and (ii) above will operate based on the last cost adjustment
for the Components.
	 
	 	 	For a Price adjustment under this Section 4.3, Patheon will deliver to Client a revised
Schedule B and budgetary pricing information, adjusted Component costs or other documents
reasonably sufficient to demonstrate that a Price adjustment is justified. Patheon will
have no obligation to deliver any supporting documents that are subject to obligations of
confidentiality between Patheon and its suppliers, if, after good faith efforts, Patheon is
unable to obtain permission from suppliers to provide supporting documents to Client where
Client is willing to be bound by the same obligations as Patheon with respect to
confidentiality. The revised Price will be effective for any Product delivered on or after
the first day of the month following Client’s receipt of the revised Schedule B.





4.4 Adjustments Due to Technical Changes.




          Amendments to the Specifications or the Quality Agreement requested by Client will only be
implemented following a technical and cost review by Patheon and are subject to Client and Patheon
reaching agreement on Price changes required because of the amendment. Amendments to the
Specifications, the Quality Agreement, or the Manufacturing Site requested by Patheon will only be
implemented following the written approval of Client, the approval not to be unreasonably withheld.
If Client 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, Client 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 Client.




4.5 Multi-Country Packaging Requirements.




          If Client decides to have Patheon perform Manufacturing Services for the Product for countries
outside the Territory, then Client will inform Patheon of the packaging requirements for each new
country and Patheon will prepare a quotation for consideration by Client 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.







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ARTICLE 5




ORDERS, SHIPMENT, INVOICING, PAYMENT 



5.1 Orders and Forecasts.





	 	(a)	 	Validation and Initial Launch Batches. To support Client’s commercial launch
requirements, Patheon will complete, release and deliver Product in accordance with Firm
Orders submitted by Client prior to the Effective Date (collectively referred to as the
“First Firm Order”), which First Firm Order includes the three validation batches of
Product produced for Client by Patheon in [***].
	 
	 	(b)	 	Rolling [***] Month Forecast. Prior to the date of this Agreement, Client has
given Patheon a non-binding [***] month forecast of the volume of Product that Client
expects to order on a monthly basis in the first [***] months of commercial manufacture of
the Product. This forecast will be updated by Client on or before the 10th day
of each month on a rolling forward basis. Client 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 [***] month forecast will prevail.
	 
	 	(c)	 	Cancellation of First Firm Order. Except with respect to the validation batches
of Product produced for Client in [***], Client 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. Except with respect to the
validation batches of Product produced for Client in [***], Client may cancel any Batches
from the First Firm Order if notice of cancellation is received by Patheon more than [***]
days but fewer than [***] days before the scheduled Delivery Date under the First Firm
Order, but Client will pay Patheon $[***] for each cancelled batch. The parties agree that
this payment will be considered liquidated damages for Patheon’s loss of manufacturing
capacity due to the Client’s cancellation of manufacturing and will not be considered a
penalty. If the First Firm Order is changed or adjusted as described above then the initial
rolling [***] month forecast will also be adjusted as necessary.
	 
	 	(d)	 	Firm Orders Thereafter. On a rolling basis during the term of this Agreement,
on or before the 10th day of each month, Client will issue an updated [***] month forecast.
The first [***] months of that updated forecast after the current month will be binding and
will be confirmed by a firm written order in the form of a purchase order or otherwise
(“Firm Order”) by Client to purchase and, when accepted by Patheon, for Patheon to
manufacture and deliver the agreed quantity of the Products on the date(s) set forth in the
Firm Order (the “Delivery Date”). Firm Orders will be submitted to Patheon at least [***]
days prior to the Delivery Date and will specify Client’s Manufacturing Services purchase
order number, quantities by Product type, the Delivery Date and schedule, and any other
elements necessary to ensure the timely manufacture and shipment of the Products. The
quantities of Products ordered in a Firm Order will be firm and binding on Client and may
not be reduced by Client. But Client may adjust the Delivery Date by no more than [***]
months not more than [***] times per Year with written notice provided at least [***] days
prior to the scheduled Delivery Date.







 




			
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	 	(e)	 	[***] Year Forecast. On or before the 10th day of June of each
Year, Client will give Patheon a written non-binding [***]-year forecast, broken down by
quarters for the [***] and [***] years of the forecast, of the volume of each Product
Client then anticipates will be required to be manufactured and delivered to Client during
the [***]-year period.
	 
	 	(f)	 	Acceptance of Firm Order. Patheon will acknowledge its receipt of the Firm
Order and the Delivery Date for the Product ordered by sending a confirmation notice to
Client within ten Business Days of its receipt of the Firm Order. The Delivery Date may be
amended by agreement of the Parties or as set forth in Sections 2.1(f) or 5.1(d). Patheon
will accept all Firm Orders submitted by Client up to [***]% of the quantities specified in
the most recent forecast submitted by Client with respect to the applicable period.





5.2 Reliance by Patheon.




     (a) Client 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, Client 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
Client. Accordingly, Client authorizes Patheon to purchase Components (excluding those Components
to be provided by Client as set forth herein) to satisfy the Manufacturing Services requirements
for Products for the first [***] months contemplated in the most recent forecast given by Client
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. The Client will give
Patheon written authorization to order Components for any launch quantities of Product requested by
Client which will be considered as part of the 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 Client within [***] 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 Client 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 Client or in third party products manufactured by Patheon,
Client will receive credit for any costs of those Components previously paid to Patheon by Client.



     (b) If Client fails to take possession or arrange for the destruction of Components within
[***] months of purchase or, in the case of finished Product, within [***] months of manufacture,
Client will pay Patheon $[***] per pallet, per month 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 $[***] per pallet per month. Storage fees are subject to
a one pallet minimum charge per month. Patheon may ship finished Product held by it longer than
[***] months to the Client at Client’s expense on [***] days written notice to the Client.





 




			
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5.3 Minimum Orders.




          Client 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 EXW (INCOTERMS 2000) Patheon’s shipping point 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 Client. Patheon will, in accordance with Client’s
instructions and as agent for Client, (i) arrange for shipping to be paid by Client and (ii) at
Client’s risk and expense, obtain any export licence or other official authorization necessary to
export the Products. Client 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)	 	Without limiting Client’s rights under this Section 5.5, Patheon and the Client understand that
there may be uncertainties and necessary adjustments in production schedules during the Initial
Manufacturing Period. The parties agree that they will work together closely to expedite deliveries
and manage the scheduling of the initial Product launch.
	 
	(b)	 	If, after the delivery and release of the Validation and Initial Launch Batches and the Initial
Manufacturing Period, Patheon is unable to deliver the quantity of Product ordered under a Firm
Order on the Delivery Date due to an act or omission by Patheon (a “Late Delivery”), Client will
receive a credit from Patheon for the Late Delivery that will be applied against the purchase price
under the next Firm Order. The credit will be [***]% of the Price of the quantities of Product not
delivered by Patheon under the Firm Order on the Delivery Date (i.e., Client Credit = [Quantity
Ordered in the Firm Order — Actual Delivery Quantities of Product] * Price * [***] %). Patheon
agrees that it will use all reasonable commercial efforts to meet delivery deadlines.
	 
	(c)	 	A Late Delivery will not be considered a material breach of this Agreement by Patheon for the
purposes of Section 8.2. If Patheon has [***] or more Late Deliveries in any calendar quarter, the
parties will meet as necessary to amicably resolve the reasons for the Late Deliveries. If the
parties are unable to resolve the matter within [***] days after the end of the applicable calendar
quarter or if the Late Deliveries continue in the next calendar quarter, Client may exercise its
right to terminate this Agreement for cause pursuant to Section 8.2(a), without a further
opportunity to cure.
	 
	(d)	 	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 by Client, a delay in Product release approval from Client, inaccurate Client
forecasts, receipt of non-conforming API or Components supplied by Client, or any market driven
delays in deliveries from Client’s approved vendors.







 




			
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5.6 Invoices and Payment.




          Invoices will be sent by fax or email to the fax number or email address given by Client to
Patheon in writing. Invoices will be sent when the Product is manufactured and released by Patheon
to the Client. Patheon will also submit to Client, with each shipment of Products, a duplicate copy
of the invoice covering the shipment. Patheon will also give Client an invoice covering any
Inventory or Components not included in finished Products which are to be purchased by Client under
Section 5.2 of this Agreement. Each invoice will, to the extent applicable, identify Client’s
Manufacturing Services purchase order number, Product numbers, names and quantities, unit price,
freight charges, and the total amount to be paid by Client. Client will pay all invoices within 30
days of the date thereof. Interest on past due accounts will accrue at [***]% per month which is
equal to an annual rate of [***]%. The Late Delivery credits set forth in this Section 5 are only
available to Client if all outstanding undisputed invoices have been paid in full or are within
[***] days outstanding from the invoice date when the Late Delivery arose.




ARTICLE 6




PRODUCT CLAIMS AND RECALLS 



6.1 Product Claims.




     (a) Product Claims. Client has the right to reject any portion of any shipment of
Products that deviates from the Specifications, cGMPs, or Applicable Laws, or is otherwise not
compliant with FDA requirements, without invalidating any remainder of the shipment. Client will
inspect the Products manufactured by Patheon 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 [***] days after Client’s receipt thereof (or, in the case of any defects
not reasonably susceptible to discovery upon receipt of the Product, within [***] days after
discovery by Client, but not after the expiration date of the Product). Should Client fail to give
Patheon the Deficiency Notice within the applicable [***] day period, then the delivery will be
deemed to have been accepted by Client on the [***] 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 [***] day period.



     (b) Determination of Deficiency. Upon receipt of a Deficiency Notice, Patheon will
have ten days to advise Client by notice in writing that it disagrees with the contents of the
Deficiency Notice. If Client and Patheon fail to agree within ten days after Patheon’s notice to
Client 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 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, Client 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 Client 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 Client, but not after the expiration date of the Product) and Client
will be responsible for the cost of the evaluation.





 




			
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     (c) Shortages. Claims for shortages in the amount of Products shipped by Patheon
will be dealt with by reasonable agreement of the parties.


6.2 Product Recalls and Returns.




     (a) Records and Notice. Patheon and Client will each maintain records necessary to permit a
Recall of any Products delivered to Client or customers of Client. 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 Client.
“Recall” will mean any action (i) by Client to recover title to or possession of quantities of the
Products sold or shipped to third parties (including, without limitation, the voluntary withdrawal
of Products from the market); or (ii) by any regulatory authorities to detain or destroy any of the
Products. Recall 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)
Client determines that any Product should be Recalled or that a “Dear Doctor” letter is required
relating the restrictions on the use of any Product, Patheon will co-operate as reasonably required
by Client, having regard to all applicable laws and regulations.



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


6.3 Patheon’s Responsibility for Defective and Recalled Products.




     (a) Defective Product. If Client 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 Client’s
account for Patheon’s invoice price for the defective Products. If Client previously paid for the
defective Products, Patheon will promptly, at Client’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 Client being liable for
payment therefor under Section 3.1, contingent upon the receipt from Client of all Active Materials
required for the manufacture of the replacement Products. For greater certainty, Patheon’s
responsibility for any loss of Active Materials in defective Product will be captured and
calculated in the Active Materials Yield under Section 2.2, it being understood that in no event
shall the foregoing be construed to limit Patheon’s obligation to refund or offset the invoice
price, if requested by Client.



     (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 promptly, at Client’s election, either: (i) refund the invoice price for
the Recalled or returned Products; (ii) offset the amount paid against other amounts due to Patheon
hereunder; or (iii) replace the Recalled or returned Products with new Products, contingent upon
the receipt from Client of all Active Materials



 - 17 - 









 




required for the manufacture of the replacement Products. For greater certainty, Patheon’s
responsibility for any loss of Active Materials in Recalled Product will be captured and calculated
in the Active Materials Yield under Section 2.2. In all other circumstances, Recalls, returns, or
other corrective actions will be made at Client’s cost and expense.




     (c) Except as set forth in Sections 6.3(a) and (b) above and in Section 10.3 below, Patheon
will not be liable to Client nor have any responsibility to Client 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 set forth in the
Specifications, (iii) results from a defect in the Active Materials or Components supplied by
Client that is not reasonably discoverable by Patheon using the test methods set forth in 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 Client of its obligations under this
Agreement.


6.4 Disposition of Defective or Recalled Products.




          Client 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 Client 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, Client 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.




          Client will have the sole responsibility for responding to questions and complaints from its
customers. Questions or complaints received by Patheon from Client’s customers, healthcare
providers or patients will be promptly referred to Client. If the question or complaint received by
Patheon relates to an adverse drug experience (as defined in 21 C.F.R. §314.80(a)), Patheon shall
notify Client immediately within one Business Day. Patheon will co-operate as reasonably required
to allow Client 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 Client
all mutually agreed upon information that will enable Client 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, Applicable Laws, and the terms and conditions of this
Agreement, all costs incurred under this Section 6.5 will be borne by Client.



6.6 Sole Remedy.




          Except for the 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 Client’s sole remedy for
any failure by Patheon to provide the Manufacturing Services in accordance with the Specifications,
cGMPs, and Applicable Laws.







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ARTICLE 7



CO-OPERATION 


7.1 Quarterly Review.




          Each party will forthwith upon execution of this Agreement appoint one of its employees to be
a relationship manager responsible for liaison between the parties. The relationship managers will
meet not less than quarterly, either in person or (at the option of Client) by video or conference
call, to review the current status of the business relationship and manage any issues that have
arisen.



7.2 Governmental Agencies.




          Subject to Sections 7.6 and 7.8, 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. Subject to Sections 7.6 and 7.8, Patheon will use commercially
reasonable efforts to notify and consult with Client before Patheon communicates with any such
governmental agency, unless legally prohibited from doing so. 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 meetings or communications with the agency with respect to Product,
and to receive copies of all communications from the agency.



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 Applicable Laws or for longer
periods as agreed upon by the Parties, 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 Applicable Laws or
otherwise agreed upon by the Parties, at which time Client will be contacted concerning the
delivery and destruction of the documents and/or samples of Products. Client is responsible for
retaining samples of the Products necessary to comply with the legal/regulatory requirements
applicable to Client.




          Patheon will provide Client with relevant documentation relating to registration and
validation batches, and any other information related thereto as may be reasonably requested by
Client.



7.4 Inspection.




          Client 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 Client 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
Client to verify that the Manufacturing Services are being performed in accordance with the
Specifications, cGMPs, Applicable Laws and the terms and conditions of this Agreement. But, with
the






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exception of “for-cause” audits, Client will be limited each Year to one cGMP-type audit, lasting
no more than two days, and involving no more than two auditors. Client may request additional
cGMP-type audits, additional audit days, or the participation of additional auditors subject to
payment to Patheon of a fee of $[***] for each additional audit day and $[***] per audit day for
each additional auditor. 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, Product Seizures, and Other Governmental Actions or
Requests.





          Patheon will notify Client as soon as practically possible, but no later than [***] after
receiving any notice of, or the commencement of, any governmental agency inspection specifically
relating to the Product, any seizure of the Product, or any other governmental action or
communication specifically relating to the Product or that could affect Patheon’s ability to
provide Manufacturing Services under this Agreement or Client’s ability to market, distribute or
sell the Product, including but not limited to the receipt of any Establishment Inspection Report
(EIR), Form FDA 483, correspondence relating to follow-up action to an inspection or warning letter
or any other significant regulatory action or communication that could affect the regulatory status
of the Products. Patheon will provide to the Client a complete copy of all relevant written
materials regarding any governmental agency notice, action, or communication specifically relating
to the Product or that could affect Patheon’s ability to perform the Manufacturing Services under
this Agreement or Client’s ability to market, distribute or sell the Product. Some information may
be redacted in cases in which Patheon is required by obligations of confidentiality to third
parties to delete other company or product names or processes. The Client has the right to advise
Patheon and to participate in any Patheon response to a regulatory communication insofar as it
specifically relates to the Product. The Client’s prior consent is required before Patheon responds
to any regulatory communication that is specifically related to the Product or that may impact
Patheon’s ability to perform the Manufacturing Services under this 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 Client reasonably requires in order to complete any filing under any applicable regulatory
regime, including any Annual Report that Client is required to file with the FDA. At the Client’s
request, Patheon will provide a copy of the Annual Product Review Report to the Client at no
additional cost. Any additional report requested by Client beyond the scope of cGMPs and customary
FDA requirements will be subject to an additional fee to be agreed upon between Patheon and the
Client.



7.8 FDA Filings.




     (a) Regulatory Authority. Client 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 Client, to the extent consistent with Patheon’s obligations under
this Agreement or as may reasonably be required, to obtain and maintain 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, Client 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.





 




			
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     (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 and Manufacturing
Controls (“CMC”) related to any Marketing Authorization, such as a New Drug Application or
Abbreviated New Drug Application, Client will give Patheon a copy of the CMC as well as all
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. Client will give Patheon
copies of all FDA filings at the time of submission which contain CMC information regarding the
Product.



     (d) Deficiencies. If, in Patheon’s sole discretion, acting reasonably, Patheon
determines that any of the information given by Client under clauses (b) and (c) above is
inaccurate or deficient in any manner whatsoever (the “Deficiencies”), Patheon will notify Client
in writing of the Deficiencies within [***] Business Days of Patheon becoming aware of the
Deficiencies. The parties will work together to have the Deficiencies resolved prior to any
pre-approval inspection.



     (e) Client 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 Client 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 Client.



     (f) Inspection by Regulatory Authorities. If Client 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 Initial Term.




          This Agreement will become effective as of the Effective Date and will continue until December
31, 2016 (the “Initial Term”), unless terminated earlier by one of the parties in accordance
herewith. This Agreement will automatically continue after the Initial Term for successive terms of
two years each unless either party gives written notice to the other party of its intention to
terminate this Agreement at least 18 months prior to the end of the then current term.



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






 




			
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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) Client 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 Client from importing,
exporting, purchasing, or selling the Product. But if this occurs, Client will still fulfill all
of its obligations under Section 8.4 below.



     (d) If Patheon terminates this Agreement under this Section 8.2, Patheon will give Client
reasonably sufficient time to contract with a third party manufacturer and to obtain approval from
the relevant regulatory agency for the third party manufacturer to manufacture the Product.


8.3 Product Discontinuation.




          Client will give at least [***] 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)	 	Client will take delivery of and pay for all undelivered Products that are
manufactured and/or packaged under a Firm Order and comply with their Specifications,
at the price in effect at the time the Firm Order was placed;
	 
	 	(b)	 	Client 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, provided that such Inventory complies with and is maintained
in accordance with its Specifications;
	 
	 	(c)	 	Client 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
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	 	 	 	accordance with Section 5.2, and the Components comply with and are maintained in
accordance with their specifications;
	 
	 	(d)	 	Patheon will return to Client or Client’s designee, as noted by Client in
writing, all unused Active Materials (with shipping and related expenses, if any, to
be borne by Client); and
	 
	 	(e)	 	Client acknowledges that no competitor of Patheon will be permitted access to
the Manufacturing Site.
	 
	 	(f)	 	Client will make commercially reasonable efforts, at its own expense, to remove
from Patheon site(s), within [***] Business Days, all of Client’s Components, Inventory
and Materials (whether current or obsolete), supplies, undelivered Product, chattels,
equipment or other moveable property owned by Client, related to the Agreement and
located at a Patheon site or that is otherwise under Patheon’s care and control
(“Client Property”). If Client fails to remove the Client Property within [***]
Business Days following the completion, termination, or expiration of the Agreement
Client will pay Patheon $[***] per pallet, per month, one pallet minimum ($[***] per
pallet, per month, one pallet minimum, for any of the Client Property that contains
controlled substances or requires refrigeration) thereafter for storing the Client
Property and will assume any third party storage charges invoiced to Patheon regarding
the Client Property. Patheon will invoice Client 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, 13.1, 13.2, 13.3, and 13.15, 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 Client Warranties.




          Client covenants, represents, and warrants that:




     (a) Non-Infringement.




	 	(i)	 	Client may lawfully disclose the Specifications to Patheon;







 




			
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	 	(ii)	 	any Client Intellectual Property, (excluding Client Intellectual
Property arising under Section 13.1(b)) used by Patheon in performing the Manufacturing
Services according to the Specifications (A) is Client’s or its Affiliate’s or
licensors’ property, and (B) may be lawfully used as directed by Client;, and (C) does
not infringe and will not infringe any Third party Rights.
	 
	 	(iii)	 	the Client Intellectual Property is sufficient to enable the
performance of the Manufacturing Services by Patheon for any Product under this
Agreement or the use or other disposition of any Product by Patheon as may be
required to perform its obligations under this Agreement and does not infringe and
will not infringe any Third Party Rights;
	 
	 	(iv)	 	To the knowledge of Client there are no actions or other legal
proceedings, concerning the infringement of Third Party Rights related to any of
the Specifications, or any of the Active Materials and the Components, or the
sale, use, or other disposition of any Product made in accordance with the
Specifications;






	 	(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 Client markets the
Products, and (ii) will be fit for the purpose intended;
	 
	 	(iii)	 	on the date of shipment, the API will conform to the specifications for
the API that Client has given to Patheon and that the API will be adequately contained,
packaged, and labelled 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, and Applicable Laws;
	 
	 	(b)	 	any Patheon Intellectual Property used by Patheon to perform the Manufacturing Services
(i) is Patheon’s or its Affiliate’s unencumbered property, and (ii) may be lawfully used by
Patheon; and
	 
	 	(c)	 	subject to the warranties of Client in Section 9.2, the performance by Patheon of the
Manufacturing Services does not infringe and will not infringe any Third Party Rights.




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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 debarred or who has engaged in any acts that may result in
debarment under the Federal Food, Drug, and Cosmetic Act (United States).



9.5 Permits.




          Client 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.




          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.




          PATHEON MAKES NO 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, except with
respect to a party’s breach of the Confidentiality Agreement or misappropriation or infringement of
the other party’s Intellectual Property, or claims for which a party is entitled to indemnity
pursuant to this Agreement.



10.2 Limitation of Liability.




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



     (b) Maximum Liability. Patheon’s maximum liability to Client under this Agreement for
any reason whatsoever, including, without limitation, any liability arising under Article 6 or
resulting from any and all breaches of its representations, warranties, or any other obligations
under this Agreement (but excluding Patheon’s indemnity obligations under Section 10.3 or claims
based on a breach of the



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Confidentiality Agreement or misappropriation or infringement of the Client’s Intellectual
Property) will not exceed the greater of $[***] or [***]% of revenues up to a maximum amount of
$[***] in the aggregate.



10.3 Patheon.




          Patheon agrees to defend, indemnify, and hold Client, 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, or relating to any
claim of personal injury or property damage to the extent that the injury or damage is the result
of a failure by Patheon to perform the Manufacturing Services in accordance with 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 Client,
its officers, employees, agents, or Affiliates.




          If a claim occurs, Client 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 defense of the claim; and (d) permit Patheon to control the defense and settlement of the
claim, all at Patheon’s cost and expense.



10.4 Client.




          Client 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, or relating to 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 Client, 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.




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



10.5 Reasonable Allocation of Risk.




          This Agreement (including, without limitation, this 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 Client has developed and holds the marketing approval for the
Products, Client requires Patheon to manufacture and label the Products strictly in accordance with
the Specifications, and Client, not Patheon, is best positioned to inform and advise potential
users about the circumstances and manner of use of the Products.






 




			
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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 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 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 arbitration in accordance with Section 13.17.



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 [***] 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 [***]
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
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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, Client hereby grants to Patheon a non-exclusive, paid-up,
royalty-free, non-transferable license of Client’s Intellectual Property which Patheon must use in
order to perform the Manufacturing Services.



     (b) All 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 Client’s Product that is the subject of the Manufacturing Services, will be the exclusive
property of Client or its licensors. Patheon hereby assigns to Client all right, title and interest
of Patheon in and to all Client Intellectual Property generated or derived by Patheon while
performing the Manufacturing Services.



     (c) All Patheon Intellectual Property will be the exclusive property of Patheon. Patheon
hereby grants to Client a perpetual, irrevocable, non-exclusive, paid-up, royalty-free,
transferable license to use the Patheon Intellectual Property used by Patheon to perform the
Manufacturing Services to enable Client 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 Client Intellectual Property will be owned by Client 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 maintain commercial general liability insurance, including blanket contractual
liability insurance covering the obligations of that party under this Agreement through the term of
this Agreement and for a period of three years thereafter. This insurance will have policy limits
of not less than (i) $5,000,000 for each occurrence for personal injury or property damage liability;
and (ii) $5,000,000 in the aggregate per annum for product and completed operations liability. If
requested each party will give the other a certificate of insurance evidencing the above and
showing the name of the issuing company, the policy number, the effective date, the expiration
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will further provide for a minimum of [***] days’ written notice to the insured of a cancellation
of, or material change in, the insurance. If a party is unable to maintain the insurance policies
required under this Agreement through no fault of its own, then the party will forthwith notify the
other party in writing and the parties will in good faith negotiate appropriate amendments to the
insurance provision of this Agreement in order to provide adequate assurances.



13.4 Independent Contractors.




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



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,
with the exception of Sections 6.1 and 8.2.


13.6 Assignment.





	 	(a)	 	Patheon may not assign this Agreement or any of its rights or obligations hereunder
without the written consent of Client, this consent not to be unreasonably withheld. But
Patheon may arrange for subcontractors to perform specific testing services arising
under this Agreement without the consent of Client.
	 
	 	(b)	 	Client may assign this Agreement or any of its rights or obligations hereunder without
approval from Patheon. But Client will give Patheon prior written notice of any
assignment, any assignee will covenant in writing with Patheon to be bound by the terms of
this Agreement. 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 Client 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 or purchaser of all or
substantially all of its business, but the assignee must execute an agreement with the
non-assigning party whereby it agrees to be bound hereunder.




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






 




			
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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.



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 Client:



Charles B. Sutphin

S2 Therapeutics, Inc.

302 Rosedale Lane

Bristol, TN 37620



Telecopier No.: 276-928-1220



Email address: pat.sutphin@niftus.net



With a copy to:



Hogan Lovells US LLP

Park Place II

7930 Jones Branch Drive, Ninth Floor

McLean, VA 22102

Attention: Cullen Taylor

Telecopier No.: 703-610-6200

E-mail address: cullen.taylor@hoganlovells.com





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If to Patheon:



Patheon Pharmaceuticals Inc.

2110 East Galbraith Road

Cincinnati, OH 45237-1625

Attention: Director of Legal Services

Telecopier No.: 513-948-6927

Email address: [Frank.McCune@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.



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. 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 Client or Patheon will have any effect on the rights, duties, or obligations
of the parties under or otherwise modify this Agreement, regardless of any failure of Client or
Patheon to object to the terms, provisions, or conditions unless the document specifically refers
to this Agreement and is signed by both parties.







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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 Client Name.




          Patheon will not make any use of Client’s name, trademarks or logo or any variations thereof,
alone or with any other word or words, without the prior written consent of Client, which consent
will not be unreasonably withheld. Despite this, Client agrees that Patheon may include Client’s
name and logo in customer lists or related marketing and promotional material for the purpose of
identifying users of Patheon’s Manufacturing Services.



13.16 Governing Law.




          This Agreement will be construed and enforced in accordance with the laws of the State of Ohio
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.



13.17 Arbitration




          Any commercial dispute between the parties as defined in Section 12.1 that is not resolved
under that Section will be settled by arbitration in accordance with the rules for commercial
arbitration of the American Arbitration Association. A list of arbitrators will be presented to the
parties from which one will be chosen using the applicable rules. The hearing shall be conducted at
a site designated by the chosen arbitrator.




     The prevailing party will be awarded all of the filing fees and related administrative costs.
Administrative and other costs of enforcing an arbitration award, including the costs of subpoenas,
depositions, transcripts and the like, witness fees, payment of reasonable attorney’s fees, and
similar costs related to collecting an arbitrator’s award, will be added to, and become a part of,
the amount due pursuant to this Agreement. Any questions involving contract interpretation shall
use the laws of the State of Ohio.



[Signature page to follow]







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




	 	 	 	 	 
	 	PATHEON PHARMACEUTICALS INC.

 	 
	 	By:  	/s/ Eric W. Evans	 
	 	 	Name:  	Eric W. Evans	 
	 	 	Title:  	CFO	 
	 
	 	WHYTHE PHARMACEUTICALS, INC. D/B/A

S2 THERAPEUTICS

 	 
	 	By:  	/s/ Charles P. Sutphin	 
	 	 	Name:  	Charles P. Sutphin	 
	 	 	Title:  	President
& CEO 	 
	 




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