Exhibit
10.66


 


CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.


 


MASTER


 


CLINICAL AND COMMERCIAL SUPPLY AGREEMENT


 


AMONG


 


GILEAD WORLD MARKETS, LIMITED


 


AND


 


GILEAD SCIENCES, INC.


 


AND


 


PATHEON INC.


 


 


JANUARY 1, 2003


 

















 


MASTER CLINICAL AND COMMERCIAL SUPPLY
AGREEMENT


 


THIS
MASTER CLINICAL AND COMMERCIAL SUPPLY AGREEMENT (the “Agreement”)
made as of the 1st day of January, 2003 (the “Effective Date”) among, on
the one hand, Gilead World Markets, Ltd., a Cayman Company (“Gilead World”),
whose registered address is Queensgate House, South Church Street, P.O. Box
1234GT, Grand Cayman, Cayman Islands, and Gilead Sciences, Inc., a Delaware
corporation (“Gilead Sciences”) with its principal office located at 333
Lakeside Drive, Foster City, CA 94404 (Gilead World and Gilead Sciences
collectively, “Gilead”), and, on the other hand, Patheon Inc., a Canadian
corporation (“Patheon”) having its principal place of business at 7070
Mississauga Road, Suite 350, Mississauga, Ontario, Canada L5N 7J8. Gilead and
Patheon are sometimes referred to herein individually as a “Party”
and collectively as the “Parties”.


 


WITNESSETH


 


WHEREAS,
Gilead Sciences will require the manufacture and supply of Drug Products (as
hereinafter defined) for clinical use and commercial distribution and sale in
the Territory and Gilead World will require the manufacture and supply of Drug
Products for commercial distribution and sale in the Territory; and


 


WHEREAS,
Patheon possesses suitable facilities to manufacture, package and test Drug
Products and will process, package and test Drug Products according to the terms
and conditions set forth below; and


 


WHEREAS,
Patheon is currently carrying out commercial manufacturing of Tenofovir DF
Tablets (with the trade name Viread and the generic name tenofovir disoproxil
fumarate) pursuant to that certain Commercial Supply Agreement dated August 1,
2001  between
Gilead World Markets (which was assigned from Gilead Irish Holdings, Inc. by
way of an Assignment of Agreement dated December 31, 2001) and Patheon Inc.
(the “Viread
Agreement”) and;


 


WHEREAS,
the Parties now desire that this Agreement shall (i) replace the Viread
Agreement such that the Viread Agreement shall be of no further force and
effect for the Processing (as defined below) of new batches of tenofovir
disoproxil fumarate tablets from and after the Effective Date, and (ii) govern
the terms and conditions of clinical and commercial manufacturing of tenofovir
disoproxil fumarate tablets and any additional Drug Products as may be agreed
to between the Parties in writing from time to time as set forth below.  For clarity, however, the Viread Agreement
shall continue to have full force and effect only with respect to Tenofovir DF
Tablets Processed between August 1, 2001 and December 31, 2002; and


 


WHEREAS,
Gilead and Patheon now desire to contract for such manufacturing on the terms
and conditions set forth herein;


 


NOW,
THEREFORE, in consideration of the foregoing premises
and the mutual covenants which are recited herein, the Parties agree as
follows:


 


CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.


 

















 


ARTICLE I


 


DEFINITIONS AND SCHEDULES


 


1.1                               DEFINITIONS


 


In this Agreement, the following capitalized terms shall have the
following meanings:


 


“Act”
means the United States Food, Drug and Cosmetics Act of 1938 (21 C.F.R. Section
201 et seq.) and any legal requirement of Canada, the European Union or other
jurisdiction within the Territory for any Drug Product, together with any
regulation promulgated under any of the foregoing, including, without
limitation, all Good Manufacturing Practices, in each case as amended from time
to time.


 


“Active
Pharmaceutical Ingredient”  or “API” shall mean, for each
Drug Product, the active drug substance of that Drug Product prior to
Processing, as listed on Exhibit A of the Product-Specific Appendix hereto for
that Drug Product.


 


“Affiliate”
shall mean any person, firm or corporation which, directly or indirectly,
through one or more intermediaries controls, is controlled by, or is under
common control with, a Party to this Agreement.  For purposes of this definition, “control” means the legal or
beneficial ownership of fifty percent (50%) or more of the voting or equity
interests, or the power or right to direct the management and affairs of the
business (including acting as the general partner of a limited
partnership).  A Gilead Affiliate is an
Affiliate of either or both of Gilead Sciences and Gilead World.


 


“Annual
API Cap” shall mean, for each API, the value
identified as such in Exhibit C of the applicable Product-Specific Appendix.


 


“API
Specifications” shall mean, with respect to a given
API, the Specifications for that API as set forth on Exhibit A of the
Product-Specific Appendix hereto for the corresponding Drug Product.


 


“Components”
shall mean, for each Drug Product, the labels, glue, product inserts and other
packaging materials required to be used for the production of that Drug Product
in accordance with the applicable Component Specifications.


 


“Component
Specifications” shall mean, with respect to the
Components for a given Drug Product, the Specifications for Components set
forth on Exhibit A of the Product-Specific Appendix for that Drug Product.


 


“Confidential
Information” shall have the meaning specified in
Section 8.2.


 


“Disposition
Package” shall mean, with respect to any shipment of
Drug Product, the documentation and records defined pursuant to the relevant
Quality Agreement (as defined in Section 2.8), which may include copies of the
Certificate of Analysis, Certificate of Compliance, quality control
documentation and manufacturing batch records for such shipment; written


 

















 


confirmation that such batch records have been reviewed and approved by
Patheon quality assurance unit; and any other documentation required by law
that is in Patheon’s possession and required by Gilead for the release of the
batch or batches of Drug Product in such shipment.


 


“Drug
Product” shall mean a product set forth on Exhibit B
of any Product-Specific Appendix.


 


“Effective
Date” shall mean January 1, 2003.


 


“Excipients”
shall mean, for each Drug Product, all materials other than the API and
Components described in the Specifications for such Drug Product as a
constituent part of such completed Drug Product.


 


“Excipient
Specifications” shall mean, with respect to the
Excipients for a given Drug Product, the Specifications for such Excipients set
forth on Exhibit A of the Product-Specific Appendix hereto for such Drug
Product.


 


“Facility”
shall mean, for a given Drug Product, any Patheon manufacturing facility
identified in Exhibit C of the Product-Specific Appendix for that Drug Product,
or any other facility used for the Processing of that Drug Product that has
been approved by Gilead, in writing.


 


“FDA”
shall mean the United States government agency known as the Food and Drug
Administration, or any successor thereto.


 


“Gilead’s
Actual Standard API Costs” shall mean, for a given API
in a given Year, the amount established in accordance with Section 4.7.


 


“Good
Manufacturing Practices” or “cGMPs” shall mean the
current Good Manufacturing Practices for manufacturing finished products as set
forth in the Act, and any other equivalent laws, rules or regulations or current
good manufacturing practices specified by a Regulatory Authority, which are
applicable to Patheon.


 


“Intellectual
Property” shall mean any intellectual property rights
including, without limitation, rights in patents, patent applications,
formulae, trade-marks, trade-mark applications, trade secrets, Inventions,
copyright, industrial designs and know-how.


 


“Inventions”
shall mean any invention, 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”
shall mean all inventories of Materials and work-in-process produced or held by
Patheon in connection with the Processing of Drug Product but, for greater
certainty, does not include any API.


 

















 


“Master
Batch Records” shall mean, for a given Drug Product,
the then-current procedures to be followed by Patheon with respect to the
Processing, handling and storage of that Drug Product and the corresponding
API, as contemplated in Exhibits A and B of the Product-Specific Appendix for
that Drug Product.


 


“Materials”
shall mean Excipients and Components as they are utilized in Processing.


 


“Patheon
Manufacturing Responsibilities”  shall
have the meaning outlined in Section 3.2(a).


 


“Processing”
shall mean the manufacturing, quality control, quality assurance and stability
testing, packaging and related services, as contemplated in this Agreement,
required to produce Drug Product from API and Materials.  “Process,” “Processing” and “Processed”
shall have analogous meanings.


 


“Product-Specific
Appendix” shall have the meaning given such term in
Section 2.1(a).


 


“Regulatory
Authority” shall mean the FDA and any other
governmental authority (whether national, federal, provincial and/or local) in
the Territory that is a counterpart to the FDA or otherwise has jurisdiction
over the manufacture or approval of any Drug Product.


 


“Regulatory
Filing” shall mean any filing with or approval by a
Regulatory Authority regarding a Drug Product or its manufacture.


 


“Specifications”
shall mean, with respect to a Drug Product, the procedures, test results,
requirements, standards and other data and documentation with respect to such
Drug Product and the Excipients and Components therefor, as set forth in
Exhibits A and B of the Product-Specific Appendix for that Drug Product, as may
be revised from time to time in accordance with the terms set forth in Section
4.5 below.


 


“Territory”
shall mean the geographical area set forth in Exhibit C of each
Product-Specific Appendix hereto for a given Drug Product.


 


“Third
Party Rights” shall mean the Intellectual Property of
any third party.


 


“Year”
shall mean, for each Drug Product, the period between the effective date of the
Product-Specific Appendix for that Drug Product (as set forth in Exhibit C of
the Product-Specific Appendix for such Drug Product) until December 31 of the
year of such effective date, and thereafter, the twelve-month period commencing
upon the completion of the immediately preceding Year.


 


“Yearly
Minimum Volume” shall mean the yearly minimum volume
of each Drug Product to be purchased by Gilead as more particularly set forth
in Exhibit C of the applicable Product-Specific Appendix.


 

















 


1.2                 SCHEDULES.


 


The following Schedules and Product-Specific Appendices as of the
Effective Date are annexed hereto and form part of this Agreement:


 


	
  Schedule A:

  	
   

  	
  Yield Calculation Schedule

  
	
   

  	
   

  	
   

  
	
  Schedule B:

  	
   

  	
  Quality Agreements

  
	
   

  	
   

  	
   

  
	
  Schedule C-1:

  	
   

  	
  Form of Product Specifications (Exhibit A
  to Appendix (•) of {Drug Name}

  
	
   

  	
   

  	
   

  
	
  Schedule C-2:

  	
   

  	
  Form of Finished Product Specifications and
  Testing Requirements (Exhibit B to Appendix (•) of {Drug Name}

  
	
   

  	
   

  	
   

  
	
  Schedule C-3:

  	
   

  	
  Form of Pricing and API Schedule (Exhibit C
  to Appendix (•) of {Drug Name}

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  APPENDIX 1 -  TENOFOVIR DISOPROXIL FUMARATE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit A to Appendix 1 - Tenofovir
  disoproxil fumarate: Drug Substance, Excipient and
  Components Specifications

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit B to Appendix 1 - Tenofovir
  disoproxil fumarate: Finished Product Specifications
  and Testing Requirements

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit C to Appendix 1 - Tenofovir
  disoproxil fumarate: Pricing and API Schedules

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  APPENDIX 2 - ADEFOVIR DIPIVOXIL

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit A to Appendix 2 – Adefovir
  dipivoxil: Drug Substance, Excipient and Components
  Specifications

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit B to Appendix 2 - Adefovir
  dipivoxil: Finished Product Specifications and
  Testing Requirements

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exhibit C to Appendix 2 - Adefovir
  dipivoxil: Pricing and API Schedules

  



 

















 


ARTICLE II



PURCHASE AND SUPPLY


 


2.1                               Purchase
and Supply Agreement.


 


(a)                                           This
Agreement including the Schedules and Appendices annexed hereto shall serve as
a master commercial supply agreement governing the manufacture, purchase and
supply of Drug Products between the Parties. 
The Parties have agreed, as of the Effective Date, to product-specific
terms governing the purchase and supply of two (2) Drug Products, Gilead’s
tenofovir disoproxil fumarate and adefovir dipivoxil products, as reflected in
Appendices 1 and 2.  Subject to Section
2.1(b), the Parties may agree to the manufacture, purchase and supply of
additional drug products by agreeing to additional product-specific terms, each
in the form of a new Appendix to this Agreement signed and delivered by a
representative of the applicable Party, annexed hereto and incorporated herein
once executed and delivered (each, a “Product-Specific Appendix”).  Each Product-Specific Appendix shall be
substantially in the form of Schedule C (e.g. C-1, C-2 and C-3) attached
hereto, and shall include, at a minimum, the following for the applicable Drug
Product:  (a) an Exhibit A setting forth
the API, API Specifications, Excipients, Excipient Specifications, Components,
Component Specifications, and Disposition Package for the Drug Product covered
by such Product-Specific Appendix; (b) an Exhibit B setting forth the finished
product Specifications; and (c) an Exhibit C setting forth the pricing terms,
Facility(ies), Territory, Yearly Minimum Volume, Drug Product costs and yields,
effective date and initial term.


 


(b)                                           Solely
Gilead Sciences shall be Patheon’s counterparty to Product-Specific Appendices
for the [*] supply of any Drug
Product [*] or for any [*] supply of any Drug Product [*]. 
Solely Gilead World shall be Patheon’s counterparty to Product-Specific
Appendices for the [*] supply of
any Drug Product [*].  Solely Gilead Sciences will have the rights
and obligations of Gilead hereunder to the extent pertaining to [*] supply of Drug Products [*] or for any [*] supply of any Drug Product for [*], in each case for which Gilead Sciences is party to the
relevant Product-Specific Appendices. Solely Gilead World will have the rights
and obligations of Gilead hereunder to the extent pertaining to [*] supply of Drug Products for [*] for which Gilead World is party to the
relevant Product-Specific Appendices. 
Gilead World agrees to an obligation to provide to Patheon a written
guarantee by Gilead Sciences, as Gilead World’s ultimate parent company, of
Gilead World’s performance under this Agreement, and, in satisfaction of such
obligation, Gilead Sciences hereby guarantees to Patheon the performance by
Gilead World of Gilead World’s obligations under this Agreement.


 


(c)                                           Changes
to the Product-Specific Appendices may only be made by prior written agreement
of the Parties.  If any Product-Specific
Appendix conflicts with the body of this Agreement, the body of this Agreement
shall control, except to the extent that such Product-Specific Appendix
explicitly references particular Sections of the body of this Agreement that do
not apply, or only partially apply, with respect to such Product-Specific
Appendix, and describes the extent to which such Sections shall not apply.  In such event, with respect to the subject
matter covered by the explicitly referenced Sections of the body of this
Agreement as applied to such Product-Specific Appendix, such Product-Specific
Appendix and not the body of this Agreement shall control.


 


(d)                                           During
the Term (as such term is defined in Section 9.1) of this Agreement, Gilead
agrees to buy, and Patheon agrees to supply, such quantities of each Drug
Product for sale in the Territory as may be set forth on Firm Orders placed by
Gilead in


 

















 


accordance with Section 2.4 at the prices set forth in Exhibit C of the
applicable Product-Specific Appendices, as may be revised from time to time in
accordance with Article IV hereof.


 


(e)                                           Minimum
Volumes of Purchases.  Patheon
acknowledges that Gilead may obtain a portion of its requirements for any Drug
Product from third parties; provided, however, Gilead agrees to purchase from
Patheon the Yearly Minimum Volume for each Drug Product as more particularly
set forth in Exhibit C of the applicable Product-Specific Appendix.


 


2.2                               Drug
Product And Materials Specifications And Testing.  Patheon shall, in Processing a Drug Product, use Excipients and
Components that conform to the Excipient Specifications and Component
Specifications, respectively, for such Drug Product. Such conformance will be
verified in accordance with the testing standards and procedures specified
therefor in the applicable Specifications. The Parties acknowledge that such
Specifications and testing standards and procedures as set forth in Exhibits A
or B of the applicable Product-Specific Appendix may need to be refined and
modified with changes that are necessary or appropriate according to applicable
Regulatory Authority requirements, or as otherwise requested by Gilead in
writing.  If such a change in the
Specifications is needed or proposed, Section 4.5 shall apply.


 


2.3                               Orders
and Forecasts.  Gilead shall provide
Patheon with the following:


 


(a)                                           concurrent
with the execution of this Agreement for the first two (2) Drug Products and
concurrent with the execution of any Product-Specific Appendix for an
additional Drug Product, a written non-binding [*] month forecast of the volume of each Drug Product that
Gilead then anticipates will be required to be produced and delivered to Gilead
during the following [*] month
period.  Such forecast will be updated
by Gilead monthly on a rolling [*]
month basis and updated forthwith upon Gilead determining that the volumes for
the first [*] months contemplated
in the most recent of such forecasts has changed by more than [*]; and,


 


(b)                                           on
or before the [*] day of each
calendar month, firm written orders (“Firm Orders”) covering the supply for each
Drug Product on the basis of [*]
units, to be produced and delivered to Gilead on a date not less than [*] from the first day of the calendar
month immediately following the date that the Firm Order is submitted.


 


(c)                                           on
or before [*], in each Year, a
written non-binding [*] forecast
(broken down by calendar quarters for the [*]
of the forecast) of the volume for each Drug Product that Gilead anticipates
will be required to be produced and delivered to Gilead during such [*] period.


 


2.4                               Firm
Orders.  The Firm Orders submitted
to Patheon pursuant to Section 2.3 shall specify Gilead’s purchase order
number, quantities, monthly delivery schedule and any other elements necessary
to identify what must be delivered to fill such Firm Order.  Unless mutually agreed upon by both Parties,
the quantities of Drug Product ordered in such written orders shall be firm and
binding on Gilead and shall not be subject to reduction, and shall only be
subject to cancellation as set forth in Section 2.10.


 

















 


2.5                               Materials
Ordering and Stockpiles.


 


(a)                                           Reliance
by Patheon.  Gilead understands and
acknowledges that Patheon will rely on the Firm Orders submitted pursuant to
Section 2.3(b) in ordering the Materials required to meet such Firm
Orders.  In addition, Gilead understands
that to ensure an orderly supply of such Materials and to achieve economies of
scale in the costs therefor, it may be desirable for Patheon to purchase such
Materials in sufficient volumes to meet the production requirements for each
Drug Product during part or all of the forecasted periods referred to in
Section 2.3(a), or such longer period as Patheon and Gilead may agree to.  Accordingly, Gilead agrees that purchases
may be made by Patheon in respect of the Materials for a given Drug Product to
satisfy the production requirements for such Drug Product for the first [*] months of the forecasted period, or
such different period as may be identified opposite such Materials in the
applicable Product-Specific Appendix or agreed in writing by the Parties.  If any Materials ordered by Patheon in
accordance with the foregoing sentence are not included in finished Drug Product
purchased by Gilead within [*]
months after the forecasted month in respect of which such purchases have been
made (or such longer period as the Parties may agree in writing), Gilead will
pay to Patheon its actual costs to acquire such unused Materials and, in the
event such Materials are incorporated into the Drug Product subsequently
purchased by Gilead, Gilead will receive credit for any costs of such Materials
previously paid to Patheon by Gilead.


 


(b)                                           Minimum
Stockpiles.  Without limiting Patheon’s
ability to purchase and hold Materials as set forth in Section 2.5(a), Patheon
shall at all times maintain an inventory of each Material sufficient to
manufacture the relevant Drug Products to fill Gilead’s Firm Orders and
forecasts in the following [*]
months, or such different period of time as may be set forth for such Material
in the applicable Product-Specific Appendix or otherwise agreed in writing by
the Parties.


 


2.6                               Minimum
Orders.  Each Drug Product to be
Processed by Patheon may only be ordered in the minimum order quantities set
out in Exhibit C of the Product-Specific Appendix for such Drug Product.  As the Parties gain additional experience
with the Processing of each Drug Product, they shall negotiate in good faith,
upon request by Gilead, to revise the minimum order quantities in the
applicable Exhibit C from time to time. 
If the Parties reach written agreement, following any necessary
technical and cost review by Patheon in accordance with Section 4.5, they shall
update the applicable Exhibit C to reflect the revised minimum order
quantities.


 


2.7                               Excipients
and Components.  All Materials shall
be purchased (with the exception of those which are supplied by Gilead, which
exceptions shall be identified in the applicable Product-Specific Appendix) and
tested by Patheon at Patheon’s expense in accordance with the applicable
Specifications.


 


2.8                               Quality
Agreements. Each Party shall allocate, use and expend the resources
necessary to perform the division of pharmaceutical responsibilities assigned
to such Party as defined in the Quality Agreement(s) as set forth in Schedule B
of this Agreement, to which such Party is a party, the terms of which, for
clarity, are a part of this Agreement. 
Without limiting the generality of the foregoing sentence, the Parties’
responsibilities relating to product


 

















 


complaints shall, at a minimum, include the following: (a) Patheon
shall, as promptly as practicable after it becomes aware (but in any event, no
later than [*] business days
thereafter), forward to Gilead or its designee, by phone and in writing, any
and all complaints or problems relating to any Drug Product, and any
information in its possession pertaining to such complaint or problem,
including but not limited to: (i) Drug Product or its labeling may have been
mistaken for or applied to another product; (ii) Drug Product may be affected
by bacteriological contamination, significant chemical, physical or other
change or deterioration or stability failures; (iii) Drug Product is the
subject of a complaint by a Third Party, a Regulatory Authority or a customer
relating to the quality of the Drug Product; (iv) a unit or batch of Drug
Product supplied to or as directed by Gilead may not be in conformance with the
applicable Specifications; or (v) a unit or batch of Drug Product supplied to
or as directed by Gilead has not been Processed in accordance with the Patheon
Manufacturing Responsibilities; (b) Gilead shall promptly inform Patheon, by
phone and in writing, of any and all complaints that Gilead receives which
implicate Patheon’s Processing of Drug Product at the Facility; and (c) Patheon
shall respond promptly to, and cooperate fully with Gilead regarding, any
reasonable request by Gilead for assistance in resolving any and all
complaints, in each case on a time frame sufficient to permit Gilead to comply
with applicable laws, rules and regulations, as notified by Gilead. The Parties
agree to negotiate in good faith to modify the Quality Agreement(s) to which
they are respective parties, pursuant to Section 4.5, from time to time as
necessary or appropriate in light of FDA or other regulatory requirements, or
at Gilead’s request.  For clarity,
either [*], or Gilead Sciences may
be party in place of Gilead World to a Quality Agreement relating to supply of
Drug Product(s) to Gilead World.


 


2.9                               Technology
Transfer.  Patheon shall facilitate,
at Gilead’s expense, any technology transfer to Gilead, its Affiliate or a
third party in relation to the Processing of Drug Product(s) to the extent
reasonably requested by Gilead.


 


2.10                        Cancellations.  Gilead may cancel any Firm Order previously
accepted by Patheon by providing Patheon with prior written notice (the “Notice”);
provided
that if Gilead cancels any Firm Order and the Notice is received [*] days or less prior to any scheduled
delivery of Drug Product covered by such Firm Order, then Gilead shall
reimburse Patheon for a percentage of the price that Patheon would have charged
Gilead for the Firm Order, which amounts shall be calculated as follows:


 


(a)                                  if
Notice is received by Patheon less than [*]
days prior to any scheduled delivery of Drug Product covered by such Firm
Order, then Gilead shall pay Patheon [*]
percent ([*]%) of the price that
Patheon would have charged Gilead for the Firm Order if it had not been
cancelled;


 


(b)                                  if
Notice is received by Patheon between [*]
to [*] days prior to any scheduled
delivery of Drug Product covered by such Firm Order, then Gilead shall pay
Patheon [*] percent ([*]%) of the price that Patheon would have
charged Gilead for the Firm Order if it had not been cancelled; or


 


(c)                                  if
Notice is received by Patheon between [*]
to [*] days prior to any scheduled
delivery of Drug Product covered by such Firm Order, then Gilead shall pay
Patheon


 

















 


[*] percent ([*]%) of the price that Patheon would have
charged Gilead for the Firm Order if it had not be cancelled.


 


This Section 2.10 shall not apply to mutually
agreed changes in production or delivery schedules, or any cancellation for
which alternative terms are mutually agreed upon by both Parties.


 


2.11                        Equipment.  If Gilead or a third party with a right to
purchase Drug Product from Gilead supplies any equipment to Patheon for use in
Processing any Drug Product:


 


(a)                                  The
Parties, or Patheon and such third party, as applicable, shall prepare a
written inventory of such equipment, which inventory shall be signed by a
representative of each Party, or a representative of Patheon and such third
party, as applicable.


 


(b)                                  Such
inventory shall set forth where and under what conditions Patheon will locate
and use such equipment.  Gilead or such
third party, as applicable, shall be responsible for validation of such
equipment.  In addition, Gilead or such
third party, as applicable, shall be responsible for any costs for
transportation, installation and training necessary to use such equipment.


 


(c)                                  Such
inventory shall set forth the routine preventative maintenance of such
equipment that Patheon must perform, and Patheon shall perform such routine
preventative maintenance in accordance with the terms and conditions of a
separate agreement to be entered into by the Parties, or between Patheon and
such third party, as applicable.  For
clarity, Patheon shall not be responsible to conduct major repairs to such
equipment.


 


(d)                                  Gilead
or such third party will retain ownership of such equipment unless otherwise
agreed to in writing by the Parties, or by Patheon and such third party, as
applicable.  Gilead or such third party,
as applicable, will be responsible to maintain any insurance as to such
equipment; provided, however, that if Gilead or such third party is unable to
procure insurance to cover such equipment in Patheon’s possession and requests
Patheon to obtain such insurance, Patheon will use reasonable efforts to obtain
such insurance at Gilead’s or such third party’s expense, as applicable.


 


ARTICLE III



SUPPLY
AND PROCESSING OF DRUG PRODUCT


 


3.1                               Supply
Of API And Materials.


 


(a)                                           For
each Firm Order of Drug Product, Gilead, at its expense, shall deliver or cause
to be delivered to the Facility, the number of kilograms of the applicable
API(s) necessary for Patheon to Process the Drug Product(s) set forth on the
relevant Firm Order.


 


(b)                                           Patheon
shall use commercially reasonable efforts to make the Facility and appropriate
personnel available in order to complete the Processing of the relevant Drug


 

















 


Product(s) and make such Drug Product(s) available for delivery on the
date specified in the relevant Firm Order. 
Within [*] business days
after Patheon’s receipt of each Firm Order, Patheon shall notify Gilead in
writing via electronic mail (in accordance with Section 10.5) whether Patheon
accepts such Firm Order on the delivery schedule set forth therein.  Patheon shall use commercially reasonable efforts
to accept all Firm Orders on the delivery schedules that they specify, and in
any event shall accept all Firm Orders to the extent not exceeding [*] percent ([*]%) of the quantity of each Drug Product forecast in the
applicable Last Forecasts (defined below) for the time period covered by the
Firm Order, subject to reasonable scheduling of each delivery within the
calendar month in which Gilead requests delivery in order to accommodate the
specific timing of each applicable facility and Patheon personnel availability.  For purposes of such [*] percent ([*]%) limit, if [*]
percent ([*]%) of the quantity of
a given Drug Product specified in a Last Forecast equals a fractional number of
batches, then the minimum number of batches that Patheon must accept in a Firm
Order shall be the next whole number of batches above the fractional number of
batches that is equal to [*]
percent ([*]%).  For example, [*]. As used in this Section, “Last Forecast” shall mean the
forecast provided under Section 2.3(a) no later than [*] months  prior to the time that Gilead requests
delivery in its Firm Order.


 


(c)                                           Patheon
shall, at its expense, purchase from a third party designated by Gilead from
Patheon’s preferred supplier list, or a supplier designated by Gilead, all
Excipients to be used in the Processing of the Drug Product.  Gilead may designate an Excipient supplier
not on Patheon’s preferred supplier list by written notice to Patheon, provided
that Gilead shall pay for any increase in costs for such Excipients resulting from
such purchase from a supplier not on Patheon’s preferred supplier list.  Each such notice shall specify either that
(a) an audit of such supplier is not required by Gilead in which case Gilead
will provide Patheon with all documentation required to support Gilead’s
qualification of such supplier; or (b) Gilead shall conduct an audit of such
supplier at its own expense.  All
Excipients shall be tested in accordance with procedures specified by Gilead in
the Excipient Specifications.  If a
particular supplier (from Patheon’s preferred supplier list or as so designated
by Gilead) is specified for a given Excipient in the applicable Specifications,
then Patheon shall obtain such Excipient from such supplier.  In addition, the Parties may provide in the
relevant Product-Specific Appendix for Gilead to procure the required
quantities of any of the Excipients for the relevant Drug Product.


 


(d)                                           Patheon
shall, at its expense, purchase all Components necessary to complete the
Processing of Drug Products.  All
Components shall meet the applicable Component Specifications as described in
Exhibit A of the Product-Specific Appendix for a given Drug Product, as amended
or supplemented from time to time under the terms and conditions
hereunder.  In addition, the Parties may
provide in the relevant Product-Specific Appendix for Gilead to procure the
required quantities of any of the Component for the relevant Drug Product.


 


3.2                               Processing
Of Drug Product.


 


(a)                                           Patheon
will Process each Drug Product in accordance with the applicable Master Batch
Records and Specifications, the Quality Agreement and any applicable federal,
provincial and local laws and regulations, including without limitation cGMPs
(hereinafter collectively the “Patheon Manufacturing Responsibilities”).  Before, during and after each


 

















 


Processing of a Drug Product, Patheon shall monitor such Processing and
the Processing environment and keep such records of the foregoing as are
required by the applicable Master Batch Records and Specifications, and in
accordance with cGMPs.  In accordance
with cGMPs and during the Term of this Agreement and as part of the Patheon
Manufacturing Responsibilities, Patheon shall (i) take all commercially
reasonable steps necessary to ensure that any Drug Product that may be
Processed by it pursuant to this Agreement shall be free of cross-contamination
from any fermentation, other manufacturing or similar activities and (ii) be
responsible for the performance of validated cleaning and changeover procedures
prior to Processing any Drug Product for Gilead.


 


(b)                                           Patheon
shall not manufacture or store any [*]
product (for example but without limitation, [*])
at, or otherwise introduce any of the foregoing to, any Facility where any API,
Component, Excipient, or Drug Product is Processed or stored without Gilead’s
advance written consent.  Gilead may
withhold such consent in its sole discretion.


 


(c)                                           Both
Parties shall promptly notify each other of any new material instructions or
specifications required by the Act and of other applicable laws, rules and
regulations, and shall confer with each other with respect to the best means to
comply with such requirements.  The
Parties shall allocate any costs of implementing such changes on an equitable
basis in accordance with, and subject to the procedures set forth in, Section
4.5.  If the proposed new instruction or
specification policy relates to the production of a Drug Product solely, then
any additional costs incurred by Patheon to produce such Drug Product shall be
passed on to Gilead in accordance with, and subject to the procedures set forth
in, Section 4.5.


 


(d)                                           Upon
prior written request, Patheon will permit duly authorized representatives of
Gilead and Gilead’s licensee(s) or distributor(s) for any Drug Product to
observe the Processing of such Drug Product and to have access to any relevant
records in connection with such Processing as more fully provided in Section
3.4 below; provided that representatives from Gilead’s licensee(s) or
distributor(s) for any Drug Product shall be granted access to Patheon’s
Facility at the same time and to the same extent as Gilead’s
representatives.  Such representatives
shall be bound by an obligation of confidentiality (comparable to that of
Article VIII) with respect to information that such representatives may obtain
during such visit to observe the Processing of Drug Product and will comply
with all Patheon standard operating policies and procedures while within the
Facility or other Patheon premises.


 


(e)                                           Patheon
shall supply Gilead with copies of Processing records, including batch records,
as they relate to each Drug Product, for the purposes of assuring product
quality and compliance with agreed-upon Processing procedures.


 


(f)                                             All
Processing of each Drug Product to be performed by Patheon under this Agreement
shall be performed at the Facility(ies) for such Drug Product specified in the
applicable Product-Specific Appendix.


 

















 


3.3                               FDA
And Regulatory Support.


 


(a)                                           Patheon
agrees to maintain a Site Master File (“SMF”) in accordance with the requirements
of the FDA, if any, as well as any comparable files required by other
Regulatory Authorities, and to provide Gilead with letters of access to such
SMF (to the extent that they are required by the FDA or other related
regulatory bodies) and comparable files and to further provide Gilead with all
documents regarding the Processing of such Drug Product.  Gilead shall be responsible for all other
filings necessary for approval and export of each Drug Product.  At Gilead’s reasonable cost, Patheon further
agrees to assist Gilead, acting reasonably, in obtaining any government or
agency approval which may be required for the marketing of any Drug Product in
any country other than the United States. 
Gilead shall provide written notice of any additional regulatory
requirements of countries, in accordance with Section 4.6.


 


(b)                                           Patheon
agrees to cooperate with any inspection by the FDA or other Regulatory
Authority.  Patheon specifically agrees
to meet and confer with Gilead representatives in advance of the pre-approval
inspections for any Drug Product and, at Gilead’s request, any other inspection
of the Facility concerning any Drug Product, provided that Patheon receives
advance notice of such inspection, and will provide Gilead with all necessary
support in connection with each such inspection as may be reasonably required.


 


(c)                                           Each
Party shall notify the other Party immediately in writing in the event a Party
learns of any action that has been or will be taken by the FDA or other
Regulatory Authority which relates to the Facility and the Processing of any
Drug Product, or which may delay or impair the ability to Process any Drug
Product in accordance with this Agreement.


 


3.4                               cGMP
Compliance and QA Audits.  Upon
prior written request, Gilead shall have the right [*] per Year to have its representatives and representatives
from its licensee(s) and distributor(s) for any Drug Product visit the Facility
during normal business hours on business days to audit Patheon’s manufacturing
process, assess Patheon’s compliance with cGMPs and quality assurance
standards, review records relating to the Processing of such Drug Product and
discuss any related issues with manufacturing and management personnel as it
relates to such Drug Product (such activities collectively, a “cGMP/QA
Audit”).  Notwithstanding the
foregoing, if Gilead’s representatives and/or representatives from its
licensee(s) and distributor(s) for any Drug Product require cGMP/QA Audits in
addition to [*] per Year, then
they shall have the right to conduct such additional cGMP/QA Audits, in the
presence of a Gilead representative, provided Gilead or such licensee(s) or
distributor(s) shall pay Patheon’s reasonable costs for the conduct of such
cGMP/QA Audits.  Gilead’s
representatives and representatives from its licensee(s) and distributor(s) for
any Drug Product shall be bound by an obligation of confidentiality with
respect to information that such representatives may obtain during such visit
to inspect and audit Patheon’s manufacturing process and the Processing of Drug
Product and will comply with all standard operating policies and procedures
while within the Facility or other Patheon premises. Notwithstanding the
foregoing, Gilead (and its licensee(s) and distributor(s) for any Drug
Product)  shall have the right to
conduct a “For Cause” audit at any time, when requested as a reasonable
response to a FDA or other regulatory agency audit notice or inquiry regarding
a Drug Product, an unresolved deviation in Processing of Drug Product by
Patheon, or customer complaints or adverse events regarding a Drug Product, and
Gilead (or such licensees or distributors) shall bear Patheon’s expenses
therefore unless as a


 

















 


result of such “For Cause” audit it is determined that there was
non-compliance with the warranties in Section 6.2.


 


3.5                               Change
in Manufacturing Process.  Patheon
shall notify Gilead if Patheon wishes to make, and obtain Gilead’s prior
written approval before Patheon implements, any of the following:  (a) a major change (as defined in applicable
regulations) including without limitation, major or regulatory changes relating
to (i) the Facility that would constitute a change under cGMPs, would impact
the validation status of the process, or would constitute noncompliance with
the Patheon Manufacturing Responsibilities, (ii) the Materials, (iii) the
Specifications, (iv) any quantitative formulae and any other aspect of Drug
Product Processing, or (v) testing methods with respect to the Drug Product;
and (b) changes that require regulatory submission, relating to the Materials,
Specifications, Facility, equipment, process, testing methods or other
procedures used to Process any Drug Product. 
Gilead’s consent with respect to such changes shall not be unreasonably
withheld, or unduly delayed; provided, however, that with respect to such changes
affecting a particular Drug Product, Patheon acknowledges that Gilead may be
required to obtain its licensee’s consent to such changes prior to providing
consent to Patheon.


 


3.6                 Compliance
with Laws.  Patheon shall materially
comply with all applicable orders, regulations, requirements and laws of any
and all Regulatory Authorities including, without limitation, all laws and
regulations applicable to (a) the transportation, storage, use, handling and
disposal of hazardous materials, (b) the Processing of Drug Products and (c)
Patheon’s performance of its obligations under this Agreement.  Patheon specifically represents and warrants
that it does not and will not use, in any capacity, the services of any person
that is debarred under the provisions of the United States Generic Drug
Diversion Act or applicable FDA regulations. 
Patheon represents and warrants to Gilead that it has and will maintain
during the Term of this Agreement, all government permits, including without
limitation, health, safety and environmental permits, legally required for the
conduct of the actions and procedures that it undertakes pursuant to this
Agreement.  Unless otherwise provided in
the Product-Specific Appendix for a given Drug Product, the Parties agree that
Patheon shall be the quality representative for purposes of [*] release of all Drug Products.


 


3.7                 Documentation.  Patheon shall keep complete, accurate and
authentic accounts, notes, data and records of the Processing services
performed under this Agreement including but not limited to all relevant
information and records relating to the Processing of Drug Products under this
Agreement which may be required from time to time to be provided to any
Regulatory Authority pursuant to applicable laws and regulations, and all Process
development information relating to the Drug Product (to the extent such
information is in Patheon’s possession) (“Documentation”).  Each Party shall maintain complete and adequate records in
accordance with and to the full extent required by cGMP and the applicable
Specifications pertaining to the methods and the Facility used for the
Processing, holding and distribution of Drug Product.  Upon written request by Gilead with reasonable notice, Patheon
will provide to representatives of Gilead or its licensee(s) or distributor(s)
for Drug Products, during normal business hours, reasonable access to
Documentation, where such access is necessary or reasonably useful to permit
Gilead or such distributor(s) or licensee(s) to comply with applicable laws, rules
or


 

















 


regulations; subject to Section 3.4, the expense of such access shall
be at the expense of Gilead or such licensee(s) or distributor(s).  Patheon shall maintain Documentation until
the later of (a) when such Documentation is no longer required by applicable
law, rule or obligation to be maintained by Gilead or Patheon, or (b) for Drug
Product supplied for (i) clinical trial supplies, the approval or withdrawal of
all applications for approval included within Regulatory Filings for such Drug
Product, or (ii) commercial supplies, one (1) year after expiration of the
shelf life for the applicable batch.


 


3.8                 Reprocess
and Rework.  Patheon shall not
conduct any rework (meaning redressing or relabeling of Drug Product) or
reprocessing (meaning repetition of any step in the manufacture of unlabeled
Drug Product from API and Excipients) activities with respect to any Drug
Product without prior written permission from Gilead. Patheon shall document
appropriately all rework and reprocessing activities conducted under this
Agreement.


 


3.9                 Variances.  Patheon shall notify Gilead within [*] business days after its discovery of
any Drug Product lot failure, or significant deviation from or variance in
manufacturing procedures or standard operating procedures for such Drug
Product.  The Parties shall promptly
discuss and mutually agree how to address any such deviation or variance.  The Quality Agreement shall include a
requirement that any deviation or variance be resolved within [*] days after discovery or such longer
period of time as may be agreed to between the Parties.


 


3.10          Storage
and Handling.  Patheon shall store
and handle API and Materials as set forth in the applicable Master Batch
Records and Specifications, and in accordance with cGMP, and shall conform to
established safety practices and procedures set forth in Gilead’s then-current
material safety data sheet.  In
addition, Patheon shall take such actions as are reasonably necessary to
protect API and Materials from damage and deterioration. If requested by Gilead
in writing, Patheon shall return or destroy, at Gilead cost and expense, any
unused API in accordance with Gilead’s written instructions.


 


3.11          Labels.  Unless otherwise agreed, Gilead, or a third
party approved by Gilead, shall supply in a timely manner all necessary copy
and art work to allow Patheon to procure Components for a Drug Product in
accordance with the applicable Component Specifications. Patheon shall use such
copy and art work to procure all necessary Components in accordance with the
applicable Component Specifications and Gilead’s written instructions, and in
compliance with applicable regulatory requirements.  Such Components shall be the only Components used for such Drug
Product.


 


3.12          Performance
Indicators.  Within [*] months after the Effective Date, the
Parties shall confer to set a timeline for the development of a commercially
reasonable system of performance indicators to evaluate the performance of
Patheon in carrying out its obligations under this Agreement. Once the system
of performance indicators is developed, the Parties shall evaluate the
Processing of Drug Products by Patheon on a quarterly basis against such
performance indicators.


 

















 


ARTICLE IV



PRICES
AND PAYMENT


 


4.1                 Price.  Prices for each Drug Product shall be as set
forth on Exhibit C of the Product-Specific Appendix for such Drug Product.  Gilead shall be responsible for the payment
of any sales and use taxes on Drug Product delivered by Patheon to Gilead or on
API furnished by Gilead to Patheon.  The
fees listed on Exhibit C of each Product-Specific Appendix shall not be subject
to change until the end of the first Year after the effective date of such
Product-Specific Appendix, subject to the amendments to such fees provided for
in Sections 4.3, 4.5 and 4.6.  The
prices for each Drug Product during each additional Year that this Agreement
remains in force shall be agreed to between the Parties prior to the
commencement of each such Year, in accordance with Section 4.4.


 


4.2                 Payment
Terms.  All payments due hereunder
to Patheon shall be paid not later than [*]
days following the date of the applicable invoice submitted by Patheon in
accordance with Section 5.2(a); provided that if such invoice is received by
Gilead more than [*] business days
after such date, Patheon will make reasonable allowances for any payments that
are late due to such delay provided that Gilead uses commercially reasonable
efforts to pay such invoice by the end of such [*] days.


 


4.3                 Adjustments
to Current Year’s Pricing.  During any
Year of this Agreement, the fees set out in Exhibit C of each Product-Specific
Appendix shall be subject to adjustment in accordance with the following:


 


(a)                                           Minimum
Order Quantity.  If at any time a
Firm Order is for less than the minimum order quantity of any Drug Product
specified in Exhibit C of the applicable Product-Specific Appendix (i.e., the
smallest campaign size so specified, as either by batch size or a minimum
number of batches or a combination of both of batch size and minimum number of batches)
then Patheon shall be entitled to request an adjustment to the fee for
Processing in respect of that Drug Product delivered under that Firm Order to
reflect the increased costs that Patheon will incur as a result of
manufacturing the lesser volume ordered by Gilead relative to the minimum order
quantity for that Drug Product.  For
clarity, the minimum order quantity relates to the size of the manufacturing
runs that Patheon will undertake to fill Gilead’s orders, and not to overall or
annual volume.


 


(b)                                           Materials
and Component Costs.  If at any time
market conditions result in Patheon’s cost of Materials being greater than
normal forecasted increases, then Patheon shall be entitled to request an
adjustment to the fee for Processing in respect of any affected Drug Product to
compensate it for such increased Materials costs.  For the purposes of this Section 4.3(b), changes greater than
normal forecasted increases shall be considered to have occurred only if (i) the
cost of a Material for such Drug Product increases by [*] percent ([*]%) of the cost for that Material upon which the fee quote
was based or (ii) the aggregate cost for all Materials required to Process a
Drug Product increases by [*]
percent ([*]%) of the total
Material costs for such Drug Product upon which the fee quote was based.  To the extent that Processing fees have been
previously adjusted pursuant to this Section 4.3(b) to reflect an increase in
the cost of one


 

















 


(1) or more Materials, the adjustments provided for in (i) and (ii) above
shall operate based on the costs attributed to such Material (or Materials) at
the time the last of such adjustments were made.


 


In connection with a fee adjustment request
pursuant to this Section 4.3, Patheon shall deliver to Gilead a revised Exhibit
C for each Drug Product for which it requests such fee adjustment and such
budgetary pricing information, adjusted Material costs or other documentation
sufficient to demonstrate that a fee adjustment is justified.  Upon delivery of such request, each of
Gilead and Patheon shall forthwith use all reasonable efforts to agree on a
revised fee for the Processing in respect of each affected Drug Product.


 


4.4                 Adjustments
to Subsequent Year’s Pricing.  The
fees for the Processing provided pursuant to the terms of this Agreement for
any Drug Product during any Year after the first Year of this Agreement for
that Drug Product shall be determined in accordance with the following:


 


(a)                                           Manufacturing
Costs.  No later than [*] months prior to the end of each Year for
each Drug Product, Patheon shall be entitled to request an adjustment to the
fees for the applicable Component costs and Processing fees in respect of such
Drug Product for the increases in manufacturing costs based on the increase in
the [*] for July of the then
current Year compared to the same month of the preceding Year, published by [*] in respect of the immediately prior
Year.


 


(b)                                           Pricing
Basis.  Gilead acknowledges that the
fee for the Processing in respect of a Drug Product in any Year is quoted based
upon the minimum order quantity per Drug Product specified in Exhibit C of each
Product-Specific Appendix for a given Drug Product and is subject to change as
set forth above if the quantity ordered by Gilead in any Firm Order falls below
the minimum order quantity for that Drug Product as specified in Exhibit C of
the applicable Product-Specific Appendix or, if applicable, any revised minimum
order quantity hereinafter agreed to by the Parties in writing; provided that
Gilead orders such Drug Product in the time period covered by such Firm
Order.  For greater certainty, if
Patheon and Gilead agree that the minimum order quantity in respect of a Drug
Product shall be reduced and, as a result of such reduction, Patheon’s costs
relating to such Drug Product increase on a per unit basis, then Patheon shall
be entitled to an increase in the fee for the Processing in respect of such
Drug Product by an amount sufficient to absorb such increase. In addition, if
Gilead will place orders for quantities permitting Patheon to manufacture in
larger production runs, the Parties shall review the fee for the Processing of
such Drug Product and shall reduce such fee on a per-unit basis by a reasonable
amount to reflect savings in Patheon’s costs relating to such Drug Product as a
result of such increase if any.


 


In connection with a fee adjustment request
pursuant to this Section 4.4, Patheon shall deliver to Gilead a revised Exhibit
C for such Drug Product and such budgetary pricing information, adjusted
Material costs for such Drug Product or other documentation sufficient to
demonstrate that a fee adjustment is justified for such Drug Product, no later
than [*] prior to the end of the
Year. Upon receipt of such a request, each of Gilead and Patheon shall
forthwith use


 

















 


all reasonable efforts to agree on a revised fee for the Processing in
respect of each affected Drug Product.


 


4.5                 Adjustments
Due To Technical Changes. 
Amendments to the Specifications for a given Drug Product, the Quality
Agreement relating to Processing or the minimum order quantities for each Drug
Product requested by Gilead will only be implemented following a technical and
cost review by Patheon and are subject to Gilead and Patheon reaching agreement
as to revisions, if any, to the fees specified in Exhibit C of the
corresponding Product-Specific Appendix or otherwise necessitated by any such
amendment.  If Gilead accepts a proposed
fee change, the proposed change in the Specifications, Quality Agreement or
minimum order quantities shall be implemented, and the fee change shall become
effective only with respect to those orders of such Drug Product that are
Processed in accordance with such revision(s). 
The Parties acknowledge in Sections 2.2, 2.6 and 2.8 the potential need
to refine or modify the Specifications, Quality Agreement or minimum order
quantities for Drug Products, respectively. 
Accordingly, the Parties will negotiate in good faith to modify the
applicable Specifications, Quality Agreement or minimum order quantities from
time to time if requested by Gilead. 
Patheon will facilitate appropriate changes to the Exhibits, and shall
implement any changes to the Specifications and/or Quality Agreement that are
required by applicable legal requirements; provided that Gilead bears the costs
of such changes to the extent relating solely to the Drug Product(s) or the
Parties reach written agreement as to a different allocation of such increased
costs.  The Parties agree to allocate on
an equitable basis any special costs of developing and implementing revised
procedures, meaning that the cost of implementing any revised procedures shall
be borne in full by Gilead in such cases where the changes are made solely for
the benefit of Gilead, and the costs of other changes shall be allocated
between the Parties on the basis of the extent to which such Party will be
benefited by such change relative to the extent to which the other Party will
be benefited by such change.  In any
event, Gilead agrees to purchase, at Patheon’s cost, all Inventory for the relevant
Drug Product utilized under any of the “old” Specifications and/or Quality
Agreement and purchased or maintained by Patheon in order to fill Firm Orders
for such Drug Product or in accordance with Section 2.5, to the extent that
such Inventory can no longer be utilized under the revised Specifications
and/or Quality Agreement.  Open purchase
orders for Materials no longer required under such revised Specifications
and/or Quality Agreement that were placed by Patheon with suppliers in order to
fill Firm Orders or in accordance with Section 2.5 shall be cancelled where
possible, and where such orders are not subject to cancellation without
penalty, shall be assigned to and satisfied by Gilead.


 


4.6                 Multi-Country
Pricing.  If Gilead decides that it
wishes to have Patheon Process a Drug Product for any country in addition to
the Territory as stated in Exhibit C of the applicable Product-Specific
Appendix, then Gilead shall inform Patheon of the packaging requirements for
such Drug Product needed for this new country market and Patheon shall prepare
a quotation for consideration by Gilead of the additional Component costs, if
any, and the change over fees for such Drug Product destined for the new
country market.  The agreed additional
packaging requirements and related packaging costs and change over fees shall
be set out in a written amendment to Exhibit C of the applicable
Product-Specific Appendix.


 

















 


4.7                 API
Cost Adjustment.  Each
Product-Specific Appendix when it is executed shall set forth Gilead’s actual
standard costs to acquire or manufacture the relevant API (“Gilead’s
Actual Standard API Costs”) in Exhibit C.  The Parties recognize that such costs may fluctuate over
time.  Therefore, at the time of annual
price adjustment pursuant to Section 4.4, Gilead shall determine an adjustment
to Gilead’s Actual Standard API Costs to reflect such costs in the [*] month period prior to such
adjustment.  Such adjusted Gilead’s
Actual Standard API Costs shall apply solely on a prospective basis.  Patheon shall have the right to audit the
methodology employed by Gilead to determine an adjusted Gilead’s Actual
Standard API Costs.


 


ARTICLE V



DELIVERY
AND ACCEPTANCE


 


5.1                               Quality
Control Sample and Documentation. 
Prior to the delivery of any batch of Drug Product, Patheon shall
provide Gilead with a quality control sample of such batch for the purpose of
confirming that such batch meets the Specifications (unless Gilead consents in
writing that no such sample is required), and the Disposition Package for such
batch.  The quality control sample shall
consist of Drug Product sampled so as to be representative of the batch.
Patheon shall not deliver a shipment of Drug Product until it has been released
by Gilead pursuant to Section 5.4(a) unless otherwise requested by Gilead in
writing.


 


5.2                               Delivery
and Title.


 


(a)                                           Unless
otherwise agreed by the Parties in writing, all shipments shall be shipped [*](as such term in defined in Incoterms
2000) [*]; provided, however, that
notwithstanding [*] responsibility
for customs clearance in accordance with [*]
as so defined in Incoterms 2000, [*]
shall be responsible to arrange for customs clearance for each shipment
hereunder.  The Parties shall reasonably
cooperate to share any information for [*]
to fulfill its responsibilities to arrange for customs clearance.  In accordance with delivery [*], [*]
shall bear all risk of loss or damage after the Drug Product [*]. 
Patheon shall package Drug Product in accordance with the applicable
Specifications.  For each shipment of
Drug Product, Patheon shall submit to Gilead the applicable Disposition Package
pursuant to Section 5.1 together with an invoice for such shipment of Drug
Product.


 


(b)                                  Patheon
shall consistently fulfill Firm Orders submitted to Patheon pursuant to Section
2.3 by supplying Drug Product with at least [*]
percent ([*]%) of initial shelf
life remaining at the time of delivery, and Gilead shall have no obligation to
accept or pay for any shipment of Drug Product delivered to Gilead with less
than [*] percent ([*]%) of initial shelf life remaining;
provided, however, that if there is a delay in delivery due to investigation
and resolution of a deviation that does not arise from Patheon’s failure to
manufacture Drug Product in accordance with the Patheon Manufacturing Responsibilities,
then the deemed delivery date for purposes of calculating remaining shelf life
under this Section 5.2(b) shall be the date preceding the actual delivery date
by a number of days equal to the length of such delay, provided that Patheon
has carried out its responsibilities in such investigation and resolution using
commercially reasonable efforts, then Gilead shall be obligated to accept and
pay for any shipment of Drug Product delivered to Gilead, subject to Gilead’s
rights pursuant to Section 5.4.


 

















 


In addition, Gilead may consent, in writing, to a shorter remaining
shelf life at delivery of any Drug Product as follows:  (i) where release of such Drug Product was
delayed to enable a major deviation to be investigated and resolved; and (ii) provided
that any such acceptance and utilization shall be subject to the written
consent of any applicable third party purchasing Drug Product from Gilead,
acting in good faith.  In the
circumstances outlined in the preceding sentence, Gilead shall be obligated to
accept and pay for such shipment of Drug Product, subject to Gilead’s rights
pursuant to Section 5.4.  Initial shelf
life shall be measured and begin to expire commencing on the date that API and
any Excipients are first combined.  In
all circumstances, Gilead shall use commercially reasonable efforts to promptly
investigate and address any deviation or variance of the Drug Product.


 


(c)                                  In
the event of a deviation at any time during the Processing of a Drug Product,
the Parties shall mutually agree upon procedures to rework, to the extent
possible, such Drug Product in accordance with Section 3.8 so that such Drug
Product will meet the applicable Specifications.


 


5.3                               Late
Delivery.


 


(a)                                           Patheon
agrees to use its commercially reasonable efforts to deliver Drug Products
hereunder on the scheduled delivery dates as set forth in the relevant Firm
Orders.  It shall not be considered a
breach of this Agreement if, for any batch for which Patheon has accepted a
Firm Order, at least [*] percent ([*]%) of Drug Product which conforms to the
Specifications is made available for delivery within [*] business days following the date originally agreed upon
for delivery in such Firm Order (the “Scheduled Delivery Date”).  However, it shall be deemed to be a late delivery
if Patheon delivers a shipment of Drug Products later than [*] business days after the relevant
Scheduled Delivery Date (such date [*]
business days after the Scheduled Delivery Date, the “Late Delivery Date”).


 


(b)                                           If
Patheon has learned that any delivery of Drug Product may be expected to:


 


(i)                                    have
less than [*] percent ([*]%) of the quantity stated in the
relevant Firm Order; and/or


 


(ii)                                be
delivered after the Late Delivery Date, according to Patheon’s master delivery
plan,


 


then Patheon shall: (1) as soon as practical,
notify Gilead; (2) ensure that [*]
of this issue; and (3) develop and implement a [*] to the extent reasonably practicable or any [*] thereof.


 


(c)                                           Notwithstanding
the previous paragraph, Patheon will notify Gilead as promptly as practicable
of such anticipated late or short delivery that is likely to occur despite
Patheon’s efforts (the “Notice”).


 

















 


(d)                                           If,
to the extent not caused by any of the events set forth in Section 5.3(h),
during any period of [*], Patheon
delivers after the relevant Late Delivery Date [*] (a “Delivery Default”), then at Gilead’s
option, Gilead may request a meeting [*].  The request for the meeting shall be given
within [*] from the date of
Notice, and the meeting shall be held within [*]
from the date of the request.


 


(e)                                  At
the meeting, the Parties will negotiate diligently and in good faith to
mutually agree upon [*] for: (i)
any [*] of Drug Product occurring
after [*]; or (ii) any delivery of
Drug Products having [*] of the
quantity stated [*]. The Parties
will, thereafter, enter into an amendment to this Agreement to reflect the
mutually agreed resolutions (the “Amending Agreement”).


 


(f)                                    If
after entering the Amending Agreement and to the extent not caused by any of
the events set forth in Section 5.3(h), there is another Delivery Default, then
such default shall deemed to be a material breach of this Agreement and Gilead
may terminate this Agreement pursuant to Section 9.3(e).


 


(g)                                 For
purposes of determining a Delivery Default pursuant to Section 5.3(d), a batch
shall not be counted as having been delivered after the Late Delivery Date if,
with respect to such batch:


 


(i)                                    the
period between the day that Patheon provides the relevant Disposition Package
to Gilead and the Scheduled Delivery Date is as long or longer than the release
review period, which shall be [*]
or such other period as mutually agreed;


 


(ii)                                the
batch has no deviations from the applicable Specifications or cGMPs that
reasonably prevent Gilead from releasing such batch within the agreed release
review period, which shall be [*]
or such other period as mutually agreed;


 


(iii)                            there
are no deviations in the shipment of such batch that would form the basis of a
Deficiency Notice pursuant to Section 5.4(b); and


 


(iv)                               Patheon
actually makes such batch available for delivery within the agreed time frame
following release by Gilead.


 


(h)                                 Notwithstanding
anything to the contrary in this Section 5.3, Patheon shall not be responsible
for the failure to satisfy any Firm Order to the extent caused by any of the
following events:


 


(i)                                    Gilead’s
failure to have delivered to Patheon adequate supplies of the applicable API;


 


(ii)                                Gilead’s
failure to deliver forecasts pursuant to Section 2.3;


 


(iii)                            Gilead’s
failure to timely deliver specifications or other technical information
necessary to perform the Processing services;


 

















 


(iv)                               a
Force Majeure event outlined in Section 10:10, provided that Patheon complies
with its obligations to address any such Force Majeure event in accordance with
Section 10.10;


 


(v)            Gilead’s
failure to deliver the Firm Orders in accordance with Section 2.3(b); or


 


(vi)                               Gilead’s
changes to any Firm Orders.


 


5.4                               Product
Deficiencies.


 


(a)                                           Release.  Gilead or its designee shall review the
Disposition Package for a potential shipment of Drug Product upon receipt of
such Disposition Package thereof and test any quality control sample in its
discretion and, within [*], shall
either release such shipment or shall give Patheon written notice (a “Deficiency
Notice”) of all claims for Drug Product that deviates from the
applicable Specifications or cGMPs, as determined by Gilead based on testing of
any quality control sample or review of the Disposition Package.  Any release by Gilead of a shipment of Drug
Product shall be deemed to be an acceptance thereof, subject to Sections 5.4(b)
and 5.4(f).  Patheon shall have no
liability for any deviations for which it has not received notice within such [*] day period that should reasonably have
been discovered within such time period by review of the Disposition Package of
such shipment.


 


(b)                                           Inspection.   Gilead or its designee shall visually inspect
shipments of Drug Product Processed by Patheon upon receipt thereof and, within
[*] days, shall give Patheon a
Deficiency Notice of all claims for Drug Product that deviates from the
applicable Specifications or cGMPs, or does not contain ordered quantities, as
determined by Gilead based on such visual inspection.  Such deviations may include, without limitation, Drug Product
that has been cross-contaminated during Processing.  Should Gilead fail to provide Patheon with a Deficiency Notice
with respect to the delivery within [*]
days of receipt of a delivery of Drug Product, then the delivery shall be
deemed to have been accepted by Gilead on the[*]
day after delivery.  Patheon shall have
no liability for any deviations for which it has not received notice within
such [*] day period that should
reasonably have been discovered within such time period by inspection of such
shipment.


 


Notwithstanding the foregoing provisions of this Section 5.4(b), for
all shipments of Drug Product Processed by Patheon [*] as specified in a Firm Order, the time period (i) for
Gilead to provide Patheon with a Deficiency Notice with respect to such
shipments, (ii) after which, if Gilead fails to provide Patheon with a
Deficiency Notice with respect to such shipment, such shipment will be deemed
accepted by Gilead, and (iii) after which, if Patheon has not received notice
from Gilead, Patheon shall have no liability for any deviations with respect to
such shipment that should reasonably have been discovered, shall be [*] days ([*]
days) of receipt of a delivery of such shipment.


 


(c)                                           Determination
of Deficiency. Upon receipt of a Deficiency Notice, Patheon shall have [*] days to advise Gilead by notice in
writing whether it disagrees with the contents of such Deficiency Notice.  If Gilead and Patheon fail to agree within [*] days after


 

















 


Patheon’s notice to Gilead as to whether any Drug Product identified in
the Deficiency Notice deviates from the applicable Specifications or cGMPs,
then the Parties shall mutually select an independent laboratory to evaluate if
such Drug Product deviates from the applicable Specifications or cGMPs.  A sample of such Drug Product shall be
submitted to the independent laboratory and such independent laboratory shall
determine within [*] days of
receipt of the relevant sample (to the extent within the control of the
Parties) whether such Drug Product meets the applicable Specifications and
cGMPs. Such evaluation shall be binding on the Parties and if such evaluation
certifies that any Drug Product deviates from the Specifications or cGMPs,
Gilead may reject that Drug Product in the manner contemplated by Section
5.4(d) and, at Gilead’s option, receive either a credit or a refund (to the
extent previously paid by Gilead) for the amount that it was invoiced by
Patheon for such shipment.  If such
evaluation does not so certify in respect of any such Drug Product, then Gilead
shall be deemed to have accepted delivery of such Drug Product upon receipt by
the Parties of the final determination in writing from the independent
laboratory. The Party against whom the independent laboratory rules shall bear
all costs of the testing.


 


(d)                                           Product
Rejection and Replacement.  Subject
to the provisions of Sections 5.4(a), (b), (c) and (f), Gilead has the right to
reject and/or return, at the expense of Patheon, any portion of any shipment of
Drug Product that deviates from the applicable Specifications or cGMPs, without
invalidating any remainder of such shipment, to the extent that such deviation
arises from Patheon’s failure to provide the Processing services in accordance
with Patheon Manufacturing Responsibilities. For such portion of any rejected
and/or returned shipment, to the extent requested by Gilead, Patheon shall use
commercially reasonable efforts to provide replacement quantities of the
applicable Drug Product(s) to Gilead or its designee as soon as possible, but
in any event, within [*] days
after the receipt by Patheon of a Deficiency Notice, regardless of whether
Patheon agrees with the rejection. 
Subject to the provisions of Sections 7.3(a) and 7.3(b), Gilead shall
supply quantities of the relevant API to permit such replacement manufacture,
and shall bear the costs of replacement quantities of rejected Drug Product.


 


(e)                                           Disposition
of Rejected Batches.  Gilead may
destroy any batch of Drug Product without Patheon’s consent in those cases
where Patheon does not dispute that the batch fails to meet the applicable
Specifications or cGMPs. To the extent that any deviation arises from Patheon’s
failure to Process the Drug Product in accordance with the Patheon
Manufacturing Responsibilities, destruction of the Drug Product shall be made
at Patheon’s expense and Gilead shall provide evidence of such destruction.


 


(f)                                             Latent
Defects.  Gilead shall notify
Patheon promptly in writing if Gilead discovers a latent defect in any quantity
of Drug Product resulting from nonconformance with the applicable
Specifications or cGMPs at any time after such quantity has been accepted in
accordance with this Section 5.4 and during its remaining shelf life, which
defect should not reasonably have been discovered during the Disposition
Package review conducted in accordance with Section 5.4(a) or the visual
inspection conducted in accordance with 5.4(b) (a “Latent Defect”).  Gilead’s notice shall be deemed to be a
Deficiency Notice, and the Parties


 

















 


shall address the Latent Defect in accordance with the provisions of
Sections 5.4(c), 5.4(d) and 5.4(e).


 


5.5                               API
Yield.


 


(a)                                           Yield-Related
Reports.  Patheon shall submit
yield-related reports for each Drug Product containing such information and at
such times as described in the Yield Calculation Schedule.


 


(b)                                           Setting
the [*] Yield.  The Parties shall determine [*] (as [*]
defined in the Yield Calculation Schedule which is attached hereto as Schedule
B) for a particular Drug Product in accordance with the Yield Calculation
Schedule.  The Parties may, upon written
agreement, adjust such [*] on a
Yearly basis to reflect further experience with Actual Yields (as defined in
the Yield Calculation Schedule).


 


5.6                               Responsibility
for [*] API in Non-Compliant
Deliveries.


 


(a)                                  If
(i) Patheon has failed to provide the Processing services in accordance with
the Patheon Manufacturing Responsibilities for a delivery of Drug Product, (ii)
the Drug Product in a delivery is not in compliance with the warranty made in
Section 6.2, (iii) a delivery of Drug Product is properly rejected by Gilead
pursuant to Section 5.4, or (iv) once a Target Yield has been set with respect
to a given Drug Product, the [*]
Yield for any delivery of that Drug Product [*]
the applicable [*] Yield, then
subject to Section 7.3(a) Patheon shall [*]
the [*] or the [*] as calculated in accordance with the
Yield Calculation Schedule for item (iv), in each case as calculated on [*]. 
Within [*] days after the
end of each Year, the Parties shall determine whether Patheon is responsible
for [*] pursuant to this Section
5.6(a), and, if Patheon is responsible for [*],
within [*] days after the end of
each Year, Gilead shall be [*]
either: (i) [*], or (ii) a [*] of such [*].


 


(b)                                  Clarification
of Relationship [*].  For clarity, the [*] by Patheon to [*]
for a given Year that is [*] the [*] for such Year shall not in and of
itself constitute a [*] of this
Agreement, however, whether a [*]
of this Agreement has occurred in any given instance shall depend on all
relevant facts and circumstances.  For
example and without limitation, if the [*]
arises out of and is associated with a [*]
of Patheon to Process any Drug Product in accordance with the Specifications
therefor, then such [*] to Process
in accordance with the Specifications may itself constitute [*] of this Agreement, even though connected
to a [*] that in and of itself
does not constitute [*].


 


ARTICLE VI



REPRESENTATIONS
AND WARRANTIES


 


6.1                               Both
Parties.  Each Party hereby
represents and warrants to the other Party as follows:


 

















 


(a)                                           Existence
and Power.  Such Party: (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized; (b) has the power and authority and the
legal right to own and operate its property and assets, to lease the property
and assets it operates under lease and to carry on its business as it is now
being conducted; and (c) is in compliance with all requirements of applicable
law, except to the extent that any noncompliance would not materially adversely
affect such Party’s ability to perform its obligations under the Agreement.


 


(b)                                           Authorization
and Enforcement of Obligations. 
Such Party: (a) has the power and authority and the legal right to enter
into the Agreement and to perform its obligations hereunder; and (b) has taken
all necessary action on its part to authorize the execution and delivery of the
Agreement and the performance of its obligations hereunder.  The Agreement when duly executed and
delivered on behalf of each Party, shall constitute a legal, valid, and binding
obligation of the Parties.


 


(c)                                           No
Conflict.  The execution and
delivery of the Agreement and the performance of such Party’s obligations
hereunder: (a) do not materially conflict with or violate any requirement of
applicable laws or regulations; and (b) do not materially conflict with, or
constitute a material default or require any consent under, any material
contractual obligation of such Party.


 


6.2                               Limited
Warranty.  Patheon warrants that
Drug Product delivered hereunder:  (a)
will be Processed in accordance with the Patheon Manufacturing Responsibilities
and in material compliance with applicable rules and regulations, including,
but not limited to, any regulations regarding use of the services of debarred
persons; (b) will be Processed in accordance with the agreed-upon manufacturing
procedures described in the applicable Master Batch Records supplied to Gilead
and agreed upon by Gilead; and (c) will conform to the applicable
Specifications set forth on Exhibits A and B of the applicable Product-Specific
Appendix hereto at the time of delivery. 
The Parties agree that Sections 3.4 (with respect to “For Cause” audit
costs), 5.4(c), 7.1(b) and 7.3(b) set forth the sole and exclusive remedy for
Patheon’s breach of the warranty in this Section 6.2.  All other remedies that would otherwise be available at law or in
equity are hereby explicitly excluded. 
The express warranties in Section 3.6 and this Section 6.2 are in lieu
of all other warranties, express or implied, including, without limitation, the
warranties of merchantability or fitness for a particular purpose.


 


6.3                               Non-Infringement.  Gilead covenants, represents and warrants
that:


 


(a)                                           the
Specifications for each of the Drug Products are its or its Affiliate’s
property and that Gilead may lawfully disclose such Specifications to Patheon;


 


(b)                                           any
Intellectual Property embodied in the Specifications and which must be utilized
by Patheon in order to Process Drug Products may be lawfully used as directed
by Gilead without infringing any Third Party Rights;


 


(c)                                           there
are no actions or other legal proceedings, the subject of which is the
infringement of Third Party Rights related to any of: (i) the Specifications;
(ii) any of the API,


 

















 


and the Materials; or (iii) the sale, marketing, distribution and use
or other disposition of any Drug Product; and


 


(d)                                           the
Specifications for all Drug Products conform to all applicable cGMPs, laws and
regulations.


 


The Parties agree that Article VII sets forth the sole and exclusive
remedy for Gilead’s breach of any of the representations and warranties in this
Section 6.3.  All other remedies
that would otherwise be available at law or in equity are hereby explicitly
excluded.


 


 


ARTICLE VII



INDEMNIFICATION


 


7.1                               Indemnity.


 


(a)                                           Subject
to Sections 7.2 and 7.3, and except to the extent the losses, liabilities,
damages, costs, fees or expenses (including reasonable attorney’s fees)
(collectively, “Losses”) resulting from any claim, suit, action, demand or
cause of action brought by a third party (each a “Third-Party Claim”) arise out
of or result from any negligent or wrongful act or omission of any of Patheon
and Patheon’s directors, officers, employees, and agents, and the directors,
officers, employees, and agents of any Patheon parent, subsidiary or related
company (the “Patheon Indemnitees”), Gilead agrees to indemnify, hold
harmless and defend the Patheon Indemnitees from and against any and all Losses
resulting from any Third-Party Claim that arises or results from: (i) the
possession or use of Drug Product by any person after delivery to Gilead or its
designee; or (ii) any claim of infringement or alleged infringement of any
Third Party Rights in respect of the Drug Product; or (iii) failure of Gilead
to perform its obligations under this Agreement, including without limiting the
generality of the foregoing, any Losses whatsoever with respect to death or
injury to person or damage to property, provided that Patheon provides Gilead
with prompt notice of any such Third-Party Claim and the exclusive ability to
defend (with the reasonable cooperation of Patheon) or settle any such
Third-Party Claim.


 


(b)                                           Subject
to Sections 7.2 and 7.3, and except to the extent the Losses resulting from any
Third-Party Claim arise or result from any negligent or wrongful act or
omission of any Gilead Indemnitee (defined below), Patheon agrees to indemnify,
hold harmless and defend Gilead and Gilead’s directors, officers, employees and
agents, and the directors, officers, employees and agents of any Gilead parent,
subsidiary, related company (collectively the “Gilead Indemnitees”) from and
against any and all Losses resulting from any Third Party Claim that results
from or arises out of (i) Patheon’s failure to Process any Drug Product in
accordance with the Patheon Manufacturing Responsibilities, (ii) any injury to
a person or damage to the Facility occurring in the course of Patheon’s
Processing hereunder, (iii) Patheon’s breach of Section 6.2, (iv) Patheon’s
negligence or wrongful misconduct or (v) transportation, storage, use, handling
and disposal of hazardous materials related to such Processing, including


 

















 


without limiting the generality of the foregoing, any Losses whatsoever
with respect to death or injury to person or damage to property, provided that
Gilead provides Patheon with prompt notice of any such Third Party Claim and
the exclusive ability to defend (with the reasonable cooperation of Gilead) or
settle any such Third Party Claim.


 


(c)                                           In
the event that the Parties cannot agree as to the application of Sections
7.1(a) and 7.1(b) above to any particular Third Party Claim, the Parties may
conduct separate defenses of such Third Party Claim.  Each Party further reserves the right to claim indemnity from the
other in accordance with Sections 7.1(a) and 7.1(b) above upon resolution of
the underlying claim, notwithstanding the provisions of Sections 7.1(a) and
7.1(b) above requiring the indemnified Party to tender to the indemnifying
Party the exclusive ability to defend such Third Party Claim.  The indemnified Party shall not compromise
or settle any such Third Party Claim without the indemnifying Party’s prior
written consent. The indemnifying Party shall not compromise or settle any such
Third Party Claim for any damages other than monetary damages without the
indemnified Party’s prior written consent. 
No such consent of an indemnified or indemnifying Party shall be
unreasonably withheld.


 


7.2                               Consequential
Damages.  UNDER NO CIRCUMSTANCES
WHATSOEVER SHALL EITHER PARTY BE LIABLE TO THE OTHER IN CONTRACT, TORT,
NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR (A) ANY (DIRECT OR
INDIRECT) LOSS OF PROFITS, OF PRODUCTION, OF ANTICIPATED SAVINGS, OF BUSINESS
OR GOODWILL; OR (B) FOR ANY LIABILITY, DAMAGE, COSTS OR EXPENSE OF ANY KIND
INCURRED BY THE OTHER PARTY OF AN INDIRECT OR CONSEQUENTIAL NATURE, EXCEPT TO
THE EXTENT THAT A PARTY MAY BE REQUIRED TO INDEMNIFY THE OTHER PARTY UNDER
SECTION 7.1 FOR AMOUNTS PAID TO A THIRD PARTY.


 


7.3                               Limitation
Of Liability.


 


(a)                                  Active
Pharmaceutical Ingredients.


 


(i)                                    Patheon
shall not be responsible for any loss or damage to any quantity of API, except
where such loss or damage occurs while such materials are located on Patheon’s
premises and results from Patheon’s negligence or intentional misconduct or
failure by Patheon to provide the Processing services in accordance with the
Patheon Manufacturing Responsibilities, or where Patheon [*] on a [*]
basis as provided in Section 5.6(a).  In
such circumstances, Patheon’s maximum liability shall be as outlined in Section
7.3(a)(iii).


 


(ii)                                For
greater certainty, Gilead acknowledges that loss or damage of API in the course
of technology transfer from Gilead to Patheon, or as part of failed regulatory,
stability or test batches, shall not be regarded as lost due to the negligence
or intentional misconduct of Patheon unless and to the extent that Patheon did
not provide the Processing services in accordance with Patheon Manufacturing
Responsibilities.  Further, Patheon
shall not be responsible for any loss or damage to any API where such loss or
damage occurs during a batch implementing a new process or procedure (a “Development
Batch”); provided, however, that both Parties shall agree, prior to
commencement of manufacture of a batch, whether such


 

















 


batch shall be deemed a Development Batch.  If the Parties do not agree in advance in writing that a given
batch is a Development batch, then such batch shall not be deemed to be a
Development Batch.


 


(iii)                            Patheon’s
maximum liability for loss or damage to any quantity of API for any reason
whatsoever including, without limitation, those referred to in Section 7.3(a)
(i) and (ii) shall be limited to the [*].


 


(b)                                           Drug
Products.  Subject to Sections
5.4(c), 5.6 and 7.1(b), Patheon shall not be liable nor have any responsibility
for any deficiencies in, or other liabilities associated with, any Drug Product
manufactured by it, including, without limitation, any deficiencies or defects
with respect to an Excipient which were not ascertainable by Patheon pursuant
to Section 3.1(c); the Specifications; or the safety, efficacy or marketability
of such Drug Product or any distribution thereof.


 


7.4                               Expenses.  No Party shall be required to pay over to
another amounts called for under this Article VII until the final resolution of
the claim, action, suit or proceeding from which the right to such payment
arose.


 


ARTICLE VIII



CONFIDENTIAL
INFORMATION


 


8.1                               Obligation.  During the Term of this Agreement and for a
period of ten (10) years thereafter, the receiving Party (the “Receiving
Party”) shall maintain in confidence all Confidential Information, as
defined in Section 8.2 below, and shall not use, disclose or grant use of such
Confidential Information except as expressly authorized by this Agreement.  The Receiving Party may disclose
Confidential Information, as authorized hereunder, only to those employees or
consultants of the Receiving Party who agree to be bound by the terms of this
Article VIII.  The Receiving Party shall
use the strictest standard of care which is practical to ensure that such
employees do not disclose or make any unauthorized use of Confidential
Information.  The Receiving Party shall
promptly notify the Disclosing Party (as defined in Section 8.2) upon discovery
of any unauthorized use or disclosure of the Confidential Information.


 


8.2                               Definition.  As used in this Agreement, the term
“Confidential Information” shall mean any information, either enabling or
disabling, including but not limited to the terms of this Agreement, any batch
record, any purchase order or other commercial relationship between the
Parties, know-how, trade secret, research, data, process, technique, algorithm,
program, design, drawing, formula, experimental design or test data relating to
any research project, work in process, future development, scientific,
manufacturing, marketing, business plan, financial or personnel matter relating
to the disclosing party (the “Disclosing Party”), its present or future
products, sales, suppliers, customers, employees, investors or business, or to
any Invention that is the property of the Disclosing Party, whether in oral,
written, graphic or electronic form disclosed by or on behalf of the Disclosing
Party under this Agreement.  The term
“Confidential Information” shall include, without limitation: (i) the
information contained in the batch records


 

















 


delivered to Gilead; (ii) any cost information related to the
Processing of Drug Product, including the cost of the Materials or Processing;
and (iii) the Specifications for Drug Product. 
All Confidential Information (as such term is defined in the Viread
Agreement) disclosed pursuant to the Viread Agreement shall be deemed to be the
Confidential Information under this Agreement of the Disclosing Party or, in
the case of Gilead, of Gilead where the disclosing party was an Affiliate of
Gilead Sciences or Gilead World.


 


8.3                               Exceptions.  Each of Patheon and Gilead shall be relieved
of any and all of the obligations under Section 8.1 regarding Confidential
Information which: (i) was known by the Receiving Party prior to receipt
hereunder (unless it became so known to the Receiving Party under a separate
agreement of confidentiality to the Disclosing Party in which case this
exception shall not apply); (ii) at the time of disclosure, was generally
available to the public, or which after disclosure hereunder becomes generally available
to the public through no fault attributable to the Receiving Party; or (iii) is
hereafter made available for use or disclosure from any third party having a
right to do so.


 


8.4                               Permitted
Disclosures.  Notwithstanding any
other provision of this Agreement, each Party may disclose Confidential
Information of the other Party:


 


(a)                                  to
the extent and to the persons and entities required by an applicable
governmental law, rule, regulation or order; provided, however, that the
Party required to disclose Confidential Information shall first have given
prompt notice to the other Party hereto to enable it to seek any available
exemptions from or limitations on such disclosure requirement and shall
reasonably cooperate in such efforts by the other Party;


 


(b)                                  to
the extent and to the persons and entities required by rules of the National
Association of Securities Dealers or other applicable securities laws, rules or
regulations;


 


(c)                                  to
the extent and to the persons and entities required for purposes of making Regulatory
Filings for any Drug Product;


 


(d)                                  as
necessary to file or prosecute patent applications, prosecute or defend
litigation or otherwise establish rights or enforce obligations under this
Agreement, but only to the extent that any such disclosure is necessary; and


 


(e)                                  where
such Confidential Information consists of Patheon batch records, protocols,
validation reports or technical reports, to the extent and to the persons and
entities solely as necessary for the purpose of controlling and setting process
parameters relating to Drug Products, including but not limited to disclosure
by Gilead to its bona fide third-party supplier(s) of processing services for
Drug Products solely as necessary for such purpose, provided that any
disclosure under this Section 8.4(e) may be made only under an agreement of
confidentiality containing provisions as least as strict as those in this
Article 8.


 

















 


8.5                               Trademarks
And Trade Names.


 


(a)                                           Each
Party hereby acknowledges that it does not have, and shall not acquire, any
interest in any of the other Party’s trademarks or trade names unless otherwise
expressly agreed.


 


(b)                                           Each
Party agrees not to use any trade names or trademarks of the other Party,
except as specifically authorized by the other Party in writing both as to the
names or marks which may be used and as to the manner and prominence of use.


 


8.6                               Improvements.


 


(a)                                           Patheon
acknowledges and agrees that it has no proprietary Intellectual Property in the
current manufacturing process for any of the Drug Products, as set forth in the
Specifications.  The Parties acknowledge
that Patheon, independently or jointly with Gilead, may develop improvements to
the Specifications, inventions and other know-how (including without limitation
data, information, processes, techniques, methods, and unpatentable inventions)
in the course of fulfilling its obligations under this Agreement (“Improvements”).
Patheon shall reasonably cooperate with Gilead in identifying any potential
Improvements in the Processing of Drug Products and agrees to disclose any such
Improvements to Gilead prior to implementing such Improvements in the
Processing of the applicable Drug Product under this Agreement.


 


(b)                                           All
Improvements that relate solely to any API, any [*] of an API, and/or Drug Product (or combination of any of
the foregoing) shall be and remain the exclusive property of Gilead
(collectively, the “Product-Specific Improvements”).  Patheon hereby assigns its entire right,
title and interest in the Product-Specific Inventions to Gilead.  Patheon shall take all reasonable steps and
execute and deliver all documents reasonably required for Gilead to evidence or
record such assignment.  Patheon shall
only use in its performance under this Agreement, employees or consultants of
Patheon who have agreed in writing to assign the Product-Specific Inventions to
Patheon.


 


(c)                                           All
Improvements that relate to any API, [*]
an API or Drug Product, but also have application [*] the API, [*]
or Drug Product, (collectively, the “Broader Improvements”) shall be and remain
the exclusive property of Patheon. 
Patheon hereby grants to Gilead an irrevocable, nonexclusive, worldwide,
royalty-free license, with the right to sublicense (through one or more tiers
of sublicensees), under the Broader Improvements to research, develop, make,
have made, use, sell, offer for sale, import and otherwise commercialize
Gilead’s (and its Affiliates’ and licensees’) products throughout the world.


 


(d)                                  Patheon
shall not use any of Patheon’s patented or trade secret technology in its
performance under this Agreement, without the prior written consent of Gilead,
which consent shall not be unreasonably withheld or unduly delayed.  The Parties shall agree, prior to the
addition of each subsequent Product-Specific Appendix, whether Patheon shall
use any such patented or trade secret technology in the Processing for the
given Drug Product, and will set forth their agreement in such Product-Specific
Appendix.


 

















 


ARTICLE IX



TERM;
TERMINATION


 


9.1                               Term.  This Agreement shall commence on the
Effective Date and shall remain in effect until the termination of all
Product-Specific Appendices, unless terminated earlier by one of the Parties as
provided herein (the “Term”).   
The initial term for each Product-Specific Appendix is set forth in Exhibit
C of such Product-Specific Appendix (the “Initial Term”) and shall automatically
continue for successive one (1) calendar year terms, unless either Party gives
written notice to the other Party of its intention to terminate such
Product-Specific Appendix at least [*]
months prior to the end of the then-current term.


 


9.2                               Surviving
Obligations.  Termination or
expiration of this Agreement shall not: (a) affect any other rights of either
Party which may have accrued up to the date of such termination or expiration;
or (b) relieve Gilead of its obligation to pay to Patheon sums due in respect
of Drug Product delivered prior to termination or expiration of this
Agreement.  The provisions of Sections
3.6, 3.7, 6.2, 9.2, and 9.5, and Articles V, VI, VII, VIII, and X shall survive
the termination or expiration of this Agreement.


 


9.3                               Termination.


 


(a)                                           Either
Party may terminate this Agreement upon written notice to the other Party if
the other Party commits any material breach of this Agreement which the breaching
Party fails to cure within [*]
days following written notice from the nonbreaching Party specifying such
breach.


 


(b)                                           Either
Party may terminate this Agreement, effective immediately upon the giving of
written notice, if the other Party shall file a petition for bankruptcy, or
shall be adjudicated bankrupt, or shall take advantage of the insolvency laws
of any state of the United States, or shall make an assignment for the benefit
of creditors, or shall have a receiver, whether appointed by private instrument
or court officer, appointed for its property.


 


(c)                                           Any
termination or expiration of this Agreement shall not affect any outstanding
obligations or payments due hereunder prior to such termination or expiration,
nor shall it prejudice any other remedies that the Parties may have under this
Agreement.


 


(d)                                           Patheon
may terminate this Agreement upon [*]
prior written notice if Gilead assigns pursuant to Section 10.9 any of its
rights under this Agreement to an assignee (excluding any Gilead Affiliates)
that is, in the opinion of Patheon acting reasonably, not a credit worthy
substitute for Gilead, is a competitor of Patheon within the field of
pharmaceutical contract manufacturing services or pharmaceutical contract
development services, or with whom Patheon has had prior materially negative
business relations (e.g., Patheon having encountered uncured instances of
non-payment of amounts due under a contract or other uncured material breaches)
and has good cause to believe that any future business relations with such
assignee will be similarly negative. Notwithstanding the foregoing, Patheon
shall continue to supply the Drug Products pursuant to the terms of this
Agreement until such time as Gilead is able to establish


 

















 


adequate alternative supply (i.e., its alternative supplier is
regulatorily approved); provided that (i) Gilead shall use commercially
reasonable efforts to promptly establish adequate alternative supply and (ii)
Gilead remains liable hereunder.


 


(e)                                           Further
Gilead Termination Rights.


 


(i)                                    If
a Delivery Default has occurred pursuant to Section 5.3(d) and Patheon and
Gilead cannot reach a satisfactory Amending Agreement pursuant to Section
5.3(e) within [*] days, then
Gilead, at its option, may either terminate this Agreement upon [*] days written notice to Patheon (in
which case Patheon shall have no right to cure the breach underlying such
conditions) or refer the issue of the terms of such Amending Agreement to
binding arbitration pursuant to Schedule D.


 


(ii)                                If
a Delivery Default has occurred subsequent to an Amending Agreement being made
by Patheon and Gilead which includes [*],
then Gilead may either terminate the Agreement or require Patheon to [*] in accordance with the Amending
Agreement.  These remedies are mutually
exclusive in respect to any Delivery Default and cannot be incurred
concurrently or sequentially in respect of the same Delivery Default.


 


9.4                               Product
Discontinuation/Withdrawal.  During
the Term of this Agreement Gilead shall provide at least (a) [*] advance notice if it intends to no
longer order a Drug Product due to that Drug Product’s discontinuation in the
market and (b) [*] advance notice
if a Drug Product is withdrawn from the market pursuant to an order by the
applicable Regulatory Authority. Upon the expiration of the applicable notice
period in this Section 9.4, this Agreement shall terminate solely with respect
to such Drug Product.


 


9.5                               Obligations
on Termination.


 


(a)                                  If
this Agreement expires or is terminated in whole or in part for any reason
other than a material default by Patheon of its obligations under this
Agreement, Gilead shall:


 


(i)                                    purchase
the Inventory, at such cost that Patheon had expended to acquire such
Inventory, applicable to the Drug Product which was purchased, produced or
maintained by Patheon in contemplation of filling Firm Orders or in accordance
with Section 2.3 prior to notice of termination being given;


 


(ii)                                purchase
all undelivered Drug Product which were Processed and/or packaged pursuant to a
Firm Order, at the price in effect at the time the Firm Order was placed; and


 


(iii)                            satisfy
the purchase price payable pursuant to Patheon’s non-cancelable orders with
suppliers of Materials, provided such orders were made by Patheon in reliance
on Firm Orders or in accordance with Section 2.3.


 

















 


(b)                                  If
this Agreement is terminated as a result of a material default by Patheon of
its obligations under this Agreement, Gilead agrees to purchase such of the
items referred to in (a), (b) and (c) above as it determines, acting
reasonably, that can be used by Gilead.


 


(c)                                  The
provisions of Article 5 will survive with respect to any purchases of Drug
Product pursuant to this Section 9.5.


 


ARTICLE X


 


MISCELLANEOUS


 


10.1                        Recall.  In the event that Drug Product is recalled
or that Gilead is required to disseminate information regarding such Drug
Products, Gilead shall so notify Patheon and, not later than may be required to
permit Gilead to meet such obligations, Patheon shall provide Gilead, at
Gilead’s cost, with such assistance in connection with such recall as may
reasonably be requested by Gilead.  If a
Drug Product is recalled due to Patheon’s negligence or failure to perform in
accordance with the Patheon Manufacturing Responsibilities, Patheon shall be responsible
for the costs reasonably required to effect such recall.


 


10.2                        Insurance.  Each Party shall maintain comprehensive
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 [*] years
thereafter, which insurance shall afford limits of not less than [*] dollars ($[*]), for each occurrence, in the aggregate for bodily injury
liability, personal injury liability, products liability, property damage
liability, contractual liability and completed operations liability.  Each Party will provide the other with a
certificate of insurance evidencing the above and showing the name of the
issuing company, the policy number, the effective date, the expiration date and
the limits of liability.  Each Party
will provide at least [*] days’
written notice to the other Party of a cancellation of, or a material change
in, the insurance of the first Party.


 


10.3                        Independent
Parties.  The Parties are not
employees, partners, or legal representatives of the other Party for any
purpose.  Neither Party shall have the
authority to enter into any contracts in the name of or on behalf of the other
Party.


 


10.4                        Governing
Law.  This Agreement is made in
accordance with, and shall be governed and construed under the laws of, the
State of New York, excluding its choice of law rules.  Both parties hereby consent to the exclusive jurisdiction and
venue of the state and federal courts of competent subject matter jurisdiction
located within the State of New York, and waive any defenses they may have to
the personal jurisdiction and venue of such courts.


 


10.5                        Notice.  Unless otherwise provided in this Agreement,
all notices, including notice of address change, required or permitted to be
given under this Agreement shall be in writing and deemed to have been
received: (a) when received if hand delivered; (b) four (4) days after being
sent by first class U.S. mail, postage prepaid; (c) one (1) business day after
being sent by overnight courier; (d) one (1) business day after facsimile
transmission to the number(s) below, with receipt confirmed; or (e) one (1)
business day after electronic mail transmission to


 

















 


the email address(es) below, with receipt confirmed, in each case
addressed to the address set forth below.


 


If to Gilead:


 


Gilead Sciences, Inc.


333 Lakeside Drive


Foster City, CA 94044


Attention: 
Vice President and General Counsel


Facsimile: 
[*]


Email Address: [*]


 


With a copy to:


 


Gilead Sciences, Inc.


333 Lakeside Drive


Foster City, CA 94044


Attention: 
Director, Manufacturing


Facsimile: 
[*]


Email Address:  [*]


 


 


If to Patheon:


 


Patheon Inc.


7070 Mississauga Road, Suite 350


Mississauga, Ontario L5N 7J8


Attention: 
President


Facsimile: 
[*]


Email Address: [*]


 


 


10.6                        Severability.  In the event any provision of this Agreement
is held to be invalid or unenforceable, the valid or enforceable portion
thereof and the remaining provisions of this Agreement will remain in full
force and effect.


 


10.7                        Waiver.  Any waiver (express or implied) by either Party
of any breach of this Agreement shall not constitute a waiver of any other or
subsequent breach.


 


10.8                        Entire
Agreement.  This Agreement
(including without limitation the schedules, appendices and the exhibits
attached hereto) and the Viread Agreement constitutes the entire, final,
complete and exclusive agreement between the Parties and supersedes all
previous agreements or representations, written or oral, with respect to the
subject matter of this Agreement.  This
Agreement may not be modified or amended except in writing signed by a duly
authorized representative of each Party. 
Any term or condition in any order, confirmation


 

















 


or other document furnished by Gilead or Patheon which is in any way
inconsistent with the terms set forth herein is hereby expressly rejected.


 


10.9                        Nonassignability:  Binding on Successors.  Except in connection with any sale of all or
substantially all of either Party’s assets, whether by merger or otherwise, any
attempted assignment of the rights or delegation of the obligations under this
Agreement shall be void without the prior written consent of the nonassigning
Party.  In the case of any permitted
assignment or transfer of or under this Agreement, this Agreement shall be binding
upon, and inure to the benefit of, the successors, and permitted assigns of the
Parties hereto.


 


10.10                 Force
Majeure.  Neither Party shall be
liable to the other for its failure to perform any of its obligations under
this Agreement, except for payment obligations, during any period in which such
performance is delayed or rendered impracticable or impossible due to
circumstances beyond its reasonable control, including without limitation
earthquakes, governmental regulations, riots, wars, acts of terrorism, fires,
floods, storms, interruption of supply of API (to the extent beyond such
Party’s reasonable control), Excipients and Components, interruption of or
delay in transportation (to the extent beyond such Party’s reasonable control),
civil disorder, acts of God, defective equipment (to the extent beyond such
Party’s reasonable control), lack of or inability to obtain fuel, power or
Materials (to the extent beyond such Party’s reasonable control), or compliance
with any order or regulation of any government entity acting within color of
right, provided that the Party experiencing the delay promptly notifies the
other Party of the delay.  Specifically
excluded from this provision are the following circumstances that interfere,
delay or render impossible the ability of Patheon to perform any of its
obligations under this Agreement: (a) strike, lockout, or work or labor
slowdowns at Patheon’s Facility(ies), (b) governmental action to which
Patheon’s response is not reasonable, and (c) shutdowns due to Patheon’s
failure to make reasonable efforts to comply with government orders or
regulations.  With respect to any of the
specifically excluded circumstances in the foregoing sentence, Patheon shall
promptly inform Gilead of any such circumstance, its extent and duration, and
any failure of Patheon to perform hereunder due to such an excluded
circumstance shall constitute a breach of this Agreement.


 


10.11                 Publicity.  Neither Party will make any announcement nor
other public statement concerning the existence or terms of this Agreement
without the consent of the other Party, except as required by law.  Notwithstanding the foregoing sentence,
Patheon may, without Gilead’s consent, disclose in presentations to groups
consisting only of current or good faith potential investors or in small group
meetings with groups consisting only of only current or good faith potential
inventors that Gilead is a client of Patheon, but Patheon may not disclose any
specific Drug Products or other products that are or are not manufactured for
or supplied to Gilead or any other specific services that are or are not
performed for Gilead.


 


10.12                 Captions.  The Parties agree that the headings in the
Agreement are used for the convenience of the Parties only and are not intended
to be used in the interpretation of the Agreement.


 

















 


10.13                 Reference
to Patheon.  Drug Product shall be
marketed without label reference to Patheon except to the extent required by
law, in which case any label reference shall be to Patheon as a manufacturer
only.


 


10.14                 Counterparts.  This Agreement may be executed in
counterparts with the same force and effect as if each of the signatories had
executed the same instrument.


 

















 


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


 


IN
WITNESS WHEREOF, the parties have executed this
Agreement as of the Effective Date.


 


	
  GILEAD WORLD MARKETS, LIMITED

  	
  PATHEON INC.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GILEAD SCIENCES, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
													



 

















 


SCHEDULE A


 


YIELD CALCULATION SCHEDULE


 


 


1.                                      Yield-Related
Definitions:


 


(a)                                  “Actual Yield”
shall mean, for a given API in each time period the [*].


 


(b)                                  “[*] Percentage” shall mean the percentage of
the [*] Yield set out in Exhibit C
of the Product-Specific Appendix hereto for the corresponding Drug Product.


 


(c)                                  “[*] Yield” shall mean, for a given API, the [*] Yield for such API, less the [*].


 


(d)                                  “[*]” shall mean, for a given API in each
time period, the total amount of that API [*]
the relevant Drug Product during such time period.  The [*] excludes API
[*] in Drug Product that is
properly rejected under Section 5.4. 
For clarity, the [*] of a
given API includes quantities of such API [*]
delivered during the applicable time period under Section 7.3(b).


 


(e)                                  “[*]” shall mean, for a given API in each
time period, the total quantity of such API [*]
is calculated by adding the [*] of
the applicable API [*] during the
applicable time period to the [*]
API for such Drug Product held at the beginning of the such period, [*] API held at the [*] Yield” shall mean, for a given API in each
time period, the end of such period.


 


(f)                                    “[*] Yield” shall mean, for a given API in each
time period, the [*] in Section 3
below in this Yield Calculation Schedule.


 


2.                                      Yield-Related
Reports: Within [*] days
after the end of each calendar quarter during the Term of this Agreement,
Patheon will submit to Gilead a report showing for each Drug Product (a) all
API received during each calendar quarter, (b) the quantities of each API held
in inventory, (c) all API contained in work-in-process and incorporated in
finished Drug Product (including samples) as of the end of each month of such
quarter and (d) the quantities of each Drug Product shipped during each month
of such quarter.  The report shall also
indicate the actual conversion ratios experienced during each calendar month of
such quarter.


 


3.                                      Setting
the [*] Yield:  Promptly after (and in any event, no more
than [*] days after) Patheon has
completed a [*] number of batches
of a particular Drug Product at a given Facility  pursuant to this Agreement
(the “Evaluation
Batches”), as set forth in the Product-Specific Appendix, the
Parties shall determine a [*]
Yield and the [*] Percentage for
such Drug Product.  Such [*] Yield shall be (a) the [*] Yield for the Evaluation Batches
(excluding any failed batches) divided by the number of Evaluation Batches [*], multiplied by (b) one hundred
(100).  The [*] Percentage shall be determined by [*].


 


4.                                      Calculation
of [*] Yield for a given
Drug Product:


 


	
  [*] Yield = [*]

  	
  x 100

  
	
  [*]

  



 

















 


5.                                      Calculation
of [*] Yield for a Given
Drug Product:


 


[*]
Yield =              [*]


 


6.                                      Patheon’s
[*] Yield:  Once a [*]
Yield has been set with respect to a given Drug Product, if the [*] Yield for a delivery of Drug Product [*] the applicable [*] Yield for that Year, then Patheon shall
be [*] for [*] pursuant to Section 5.6(a) for the [*] based on the following calculation:


 


[*]
=  [*]
* [*]  [*]  * [*]


 

















 


SCHEDULE B


 


QUALITY AGREEMENT(S) 


 


QUALITY AGREEMENT ON THE TASKS AND DIVISION
OF RESPONSIBILITIES


 


Defined roles and responsibilities of Patheon and Gilead are referenced
in the attached agreement, effective January 1, 2003, as may be amended thereto
from time to time through mutual written agreement of the Parties.


 

















 


SCHEDULE C-1


 


FORM OF PRODUCT SPECIFICATIONS


 


EXHIBIT A to APPENDIX [*] – [DRUG NAME]


 


 


DRUG SUBSTANCE, EXCIPIENT AND COMPONENT
SPECIFICATIONS AND TESTING for
                                                   


 


All API, Excipient and Component testing shall be performed in
accordance with the following Specifications, as may be amended from time to
time by mutual written agreement of the Parties:


 




	
  DESCRIPTION

  	
   

  	
  SPECIFICATION

  
	
   

  	
   

  	
   

  
	
  API

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Excipients

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Components

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  






 












[*] to any entity
other than Gilead without Gilead’s prior written consent.]


 


1

















 


SCHEDULE C-2


 


FORM OF FINISHED PRODUCT SPECIFICATIONS AND
TESTING REQUIREMENTS


 


EXHIBIT B TO APPENDIX [*] [DRUG NAME]


 


1

















 


SCHEDULE C-3


 


FORM OF PRICING AND API SCHEDULE


 


EXHIBIT C TO APPENDIX [*] [DRUG NAME]


 


1.                                      Launch Supplies


 


Pricing for packaged
                 
prepared according to         Kg batch sizes
in preparation for launch are established according to the schedule below.  This pricing reflects initial packaging as
unlabeled bottles followed by subsequent labeling and cartoning with inserts.


 


	
   

  	
   

  	
  USA

      Kg

  Brite Stock

  	
   

  	
  USA

      Kg

  Brite Stock

  	
   

  	
  USA

      Kg

  Brite Stock

  	
   

  
	
   

  	
   

  	
  30’s

  Bottles
[*]

  	
   

  	
  30’s

  Bottles
[*]

  	
   

  	
  30’s

  Bottles
[*]

  	
   

  
	
  Minimum Order Quantity (units)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Run Quantity (units)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Price p/unit

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Prices quoted in USD


 


1

















 


2.                                      [*] Product Pricing and [*] Product Pricing:


 


Pricing for packaged
              
are established according to the schedule below.  This pricing reflects all manufacturing, primary packaging and
secondary packaging as required for the [*].


 




	
   

  	
   

  	
  Price per 30’s

  Bottle in USD

  	
   

  
	
  Pricing for     kg
  Batch Size

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  
	
  Minimum
  order quantity (Batches)

  	
   

  	
   

  	
   

  
	
  Pricing for     kg
  Batch Size

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  
	
  Minimum
  order quantity (Batches)

  	
   

  	
   

  	
   

  






 


Conditions:


 


3.                                      Gilead’s
Actual Standard API Cost for 200(*): 


 


4.                                      Patheon’s
Annual API Cap:


 


5.                                      Territory:


 


6.                                      Facility(ies):



 


7.                                      Yearly
Minimum Volume for 200(*):


 


8.                                      [*] Percentage for 200(*):


 


9.                                      Number
of Evaluation Batches to Set [*]
Yield:


 


10.                               [*] Yield for 200(*):


 


11.                               [*] Yield for 200(*):


 


12.                               Appendix
Effective Date:


 


13.                               Initial
Term:


 


2

















 


SCHEDULE D


 


ARBITRATION


 


(a)                                  Referable
Issue.  Only the issue of the terms
of an Amending Agreement under Sections 5.3(e) and 9.3(e)(i) (“Referable
Issue”) may be submitted for resolution and finally determined under
Schedule D.  No other issues or disputes
arising under this Agreement, shall be resolved as set forth in this Schedule
D.


 


(b)                                  Finality
of Decision.  The resolution of a
Referable Issue made pursuant to this Schedule D shall be a final resolution
and shall not be subsequently reviewable or justiciable in a court of law.


 


(c)                                  Selection
of Industry Expert.  Within [*] days after Gilead refers a Referable
Issue for resolution under this Schedule D, each Party shall propose one (1)
individual (i) having at least ten (10) years of significant management level
experience with respect to manufacturing operations in the biopharmaceutical
industry, (ii) that is not directly or indirectly affiliated with either Party
or with either Party’s Affiliates, sublicensees or business partners, and (iii)
that does not have any direct or indirect interest of any kind in the
resolution of the Referable Issue (a person having such characteristics, a “Qualified
Individual”).  If the Parties
are able to agree as to one of the Qualified Individuals proposed by a Party to
resolve the Referable Issue within [*]
days after the date by which the Parties’ notices to identify Qualified
Individuals are due, then that person shall be the “Industry Expert”.  If the Parties are unable to agree as to
such a person within such [*] day
period, then within [*] days after
expiration of such [*] day period,
the two (2) Qualified Individuals chosen by the Parties shall select another
Qualified Individual before whom such Referable Issue shall be resolved, and
that person shall be the “Industry Expert”.


 


(d)                                  Resolution
of Referable Issue. Within [*]
days after the selection of the Industry Expert pursuant to Section (c) of this
Schedule D, each Party shall submit to the other Party and to the Industry
Expert a single, comprehensive, written proposal for the Amending Agreement,
including without limitation the proposed Amending Agreement itself and any
written materials in support of such proposal, with the entire submission of a
Party not to exceed [*] pages in a
format substantially similar to this Agreement.  Within [*] days of
the submission deadline for the proposals, the Industry Expert shall adopt in
its entirety the single proposal of one of the Parties that the Industry Expert
determines to be the more reasonable proposal. 
The Industry Expert shall have no authority to combine elements from one
Party’s proposal with elements from the other Party’s proposal or to alter the
terms of either Party’s proposal.  The
Industry Expert shall determine the reasonableness of the Parties’ proposals
with respect to their terms based upon how well they reflect the following
principles: (i) acceptability in the biopharmaceutical manufacturing sector as
a commercially reasonable solution to the specific issues between the Parties;
(ii) preservation of the Parties’ ongoing manufacture and supply relationship
for the Drug Products; (iii) ability under the proposal of each Party, through
the use of commercially reasonable efforts, to attain the same economic
profitability it could attain through performance in compliance with the
original agreement; (iv) likelihood that the proposal


 


1

















 


will incentivize each Party to perform its obligations as reflected in
the original Agreement; (v) minimization of interruption of supply, prompt
correction of prior shortages in supply and consistency of supply; and (vi)
ease of administration and implementation. 
Promptly after selection of a proposal by the Industry Expert, the
Parties shall execute and deliver the Amending Agreement included in the
proposal selected by the Industry Expert. 
Such Amending Agreement shall have retroactive effect to the date of the
Notice given pursuant to Section 5.3(c).


 


(e)                                  Interim
Performance; Costs.  Until execution
and delivery of an Amending Agreement pursuant to Section (d) of this Schedule
D, the Parties shall continue to perform their obligations under this Agreement
in good faith and make any applicable payments accordingly.  The Parties shall bear all expenses and
costs of the Industry Expert incurred pursuant to this Schedule D equally.


 


2

















 


APPENDIX 1 -
TENOFOVIR DISOPROXIL FUMARATE


 


EXHIBIT A


 


DRUG SUBSTANCE, EXCIPIENT AND COMPONENT
SPECIFICATIONS


 


All API, Excipient and Component testing shall be performed in
accordance with the following Specifications, as may be amended from time to
time by mutual written agreement of the Parties:


 


	
  DESCRIPTION

  	
   

  	
  CURRENT

  GILEAD PART

  NUMBER

  	
   

  	
  CURRENT GILEAD

  SPECIFICATION

  	
   

  
	
  API

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  Excipients

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  Primary Components

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 


[*]


 


i

















 


APPENDIX 1
–TENOFOVIR DISOPROXIL FUMARATE


 


EXHIBIT B


 


FINISHED PRODUCT SPECIFICATIONS AND TESTING
REQUIREMENTS FOR

TENOFOVIR DISOPROXIL FUMARATE TABLETS


 


1.               Specifications to conform with [*], effective [*] and [*]
effective [*], as may be amended
from time to time through mutual written agreement of the parties.


 


2.               Testing to be performed by Patheon in
accordance with the testing referenced in the above specification, according to
the standard test methods listed or mutually qualified equivalent methods and
as may be amended thereto from time to time through mutual written agreement of
the parties.


 


i

















 


APPENDIX 1
—TENOFOVIR DISOPROXIL FUMARATE


 


EXHIBIT C


 


PRICING AND API SCHEDULE


FOR 2003


 


 


1.                                      Launch
Supplies:  [*]


 


2.                                      Product
Pricing:


 


[*]


 


	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 


[*]


 


 


[*]


 


	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 


i

















 


Overall
Manufacturing and Packaging Assumptions 


 


a)              Labeled packaging
configuration includes: [*]


b)             Unlabeled packaging
configuration includes: [*]


c)              Bulk packaging
configuration includes:  [*]


d)             Unit pricing is based
on [*].  A [*] will apply if [*].


e)              Unit pricing is
based on [*].  A [*]
will apply if[*].


f)                The minimum order quantity (Batches)
can be packaged in [*].  The [*]
campaign can [*].


g)             Conditions:


•                  [*]  


 


Sub Lot Packaging[*] Market Assumptions


 


a)              Gilead is [*] the packaging of a batch [*].


b)             For markets using the same packaging
formats, the [*] cost per unit
applies with [*] as noted.  This requires inserts, cartons and labels to
be essentially the same with text differences.


c)              Order quantities [*] for each label will apply.  The costs associate with the extra plates
and dies are [*].


d)             [*]
are applicable for each time that the [*].  No more than [*] per batch will be allowed.


e)              For packaging configurations that
represent different label, carton, or insert sizes or physical configurations,
a separate quote will be issued.


 


ii

















 


	
  3.

  	
   

  	
  Gilead’s Actual Standard API Cost for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Patheon’s Annual API Cap:

  	
   

  	
   

  



 


	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  5.

  	
   

  	
  Territory:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Facility(ies):

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
  [*]

  



 


7.                                      Yearly
Minimum Volume:   The Yearly
Minimum Volume for Tenofovir Disoproxil Fumarate shall be the lesser of:


 


(a)  [*];
or


 


(b)  [*]


 


	
  8.

  	
   

  	
  [*]
  Percentage for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Number of Evaluation Batches to Set [*] Yield:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  [*] Yield
  for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  [*] Yield
  for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  [*] Yield:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Appendix Effective Date:

  	
   

  	
  January 1, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Initial Term:

  	
   

  	
  January 1, 2003 to December 31, 2007

  



 


iii

















 


APPENDIX 2 – ADEFOVIR DIPIVOXIL


 


EXHIBIT A


 


DRUG SUBSTANCE, EXCIPIENT AND COMPONENT
SPECIFICATIONS 


 


All API, Excipient and Component testing shall be performed in
accordance with the following Specifications, as may be amended from time to
time by mutual written agreement of the Parties:


 




	
  DESCRIPTION

  	
   

  	
   

  	
   

  	
  SPECIFICATION

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  
	
  Primary Components

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  






 


[*]


 


i

















 


APPENDIX 2 – ADEFOVIR DIPIVOXIL


 


EXHIBIT B


 


FINISHED PRODUCT SPECIFICATIONS AND TESTING
REQUIREMENTS


 


1.               Specifications to conform with [*], effective [*], as may be amended from time to time through mutual
written agreement of the parties.


 


2.               Testing to be performed by Patheon in
accordance with the testing referenced in the above specification, according to
the standard test methods listed or mutually qualified equivalent methods and
as may be amended thereto from time to time through mutual written agreement of
the parties.


 


ii

















 


APPENDIX 2 – ADEFOVIR DIPIVOXIL


 


EXHIBIT C


 


PRICING AND API SCHEDULE


 


FOR 2003


 


 


 


1.                                      Launch
Supplies: [*]


 


2.                                      Pricing[*]


 


	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 


[*]


 


 


Pricing [*]


 


	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 

















 


Overall
Manufacturing and Packaging Assumptions 


 


a)              Labeled packaging
configuration includes:  [*]


b)             Unlabeled packaging
configuration includes: [*]


c)              Bulk packaging
configuration includes:  [*]


d)             Unit pricing is based
on [*].  A [*] will apply if [*].


e)              Unit pricing is
based on [*].  A [*]
will apply if [*].


f)                The minimum order quantity (Batches)
can be packaged in [*].  The minimum order quantity (Batches) for [*].


g)             Conditions:


•                  [*]


 


Sub Lot Packaging- Market Assumptions


 


a)                                      .


a)              Gilead is [*] the packaging of a batch [*]


b)             For markets using the same packaging
formats, the [*] cost per unit
applies with [*] as noted.  This requires inserts, cartons and labels to
be essentially the same with text differences.


c)              Order quantities [*] for each label will apply.  The costs associate with the extra plates
and dies are [*].


d)             [*]
are applicable for each time that the [*].  No more than [*] per batch will be allowed.


e)              For packaging configurations that
represent different label, carton, or insert sizes or physical configurations,
a separate quote will be issued.


 


ii

















 


	
  3.

  	
   

  	
  Gilead’s Actual Standard Cost for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Annual API Cap [*]:

  	
   

  	
   

  



 


	
   

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  	
  [*]

  	
   

  



 


	
  5.

  	
   

  	
  Territory:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Facility(ies):

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Yearly Minimum Volume

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  [*]
  Percentage for 2003:

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Number of Evaluation Batches to Set Target Yield:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  [*] Yield
  for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  [*] Yield
  for 2003:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  [*] Yield:

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Appendix Effective Date:

  	
   

  	
  January 1, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Initial Term:

  	
   

  	
  January 1, 2003 to December 31, 2007

  
						



 


iii