Manufacturing Services Agreement

June 7, 2010




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Table of Contents
 ARTICLE 1 INTERPRETATION
    
    
    11.1 Definitions
    
    
    11.2 Currency
    
    
    51.3 Sections and Headings; Interpretation
    
    
    51.4 Singular Terms
    
    
    61.5 Schedules
    
    
    6ARTICLE 2 PATHEONS MANUFACTURING SERVICES
    
    
    62.1 Manufacturing Services
    
    
    6ARTICLE 3 PENWESTS OBLIGATIONS
    
    
    73.1 Payment
    
    
    7ARTICLE 4 PRICING AND COMPONENT COSTS
    
    
    74.1 First Year Pricing
    
    
    74.2 Price Adjustments  Subsequent Years Pricing
    
    
    74.3 Price Adjustments  Current Year Pricing
    
    
    84.4 Adjustments Due to Technical Changes
    
    
    84.5 Audit Rights
    
    
    94.6 Limitation on Price Adjustments
    
    
    9ARTICLE 5 ORDERS, SHIPMENT, INVOICING, PAYMENT
    
    
    95.1 Orders and Forecasts
    
    
    95.2 Orders
    
    
    115.3 Shipments
    
    
    115.4 On Time Delivery
    
    
    115.5 Invoices and Payment
    
    
    12ARTICLE 6 PRODUCT CLAIMS, FAILURE TO SUPPLY AND RECALLS
    
    
    126.1 Product Claims
    
    
    126.2 Product Recalls and Product Returns
    
    
    136.3 Patheons Responsibility for Defective and Recalled Products
    
    
    14
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6.4 Failure to Supply
    
    
    146.5 Disposition of Defective or Recalled Products
    
    
    156.6 Healthcare Provider or Patient Questions and Complaints
    
    
    166.7 Sole Remedy
    
    
    16ARTICLE 7 CO-OPERATION
    
    
    167.1 Quarterly Review
    
    
    167.2 Governmental Agencies
    
    
    167.3 Records and Accounting by Patheon
    
    
    167.4 Inspection
    
    
    177.5 Access to the Facility; Audit Rights
    
    
    177.6 Notification of Regulatory Inspections
    
    
    177.7 Reports
    
    
    177.8 FDA Filings
    
    
    17ARTICLE 8 TERM AND TERMINATION
    
    
    188.1 Initial Term
    
    
    188.2 Termination for Cause
    
    
    188.3 Termination by Penwest
    
    
    198.4 Obligations on Termination
    
    
    19ARTICLE 9 REPRESENTATIONS, WARRANTIES AND COVENANTS
    
    
    209.1 Authority
    
    
    209.2 Penwest Warranties
    
    
    209.3 Patheon Warranties
    
    
    219.4 Debarred Persons
    
    
    219.5 Permits
    
    
    219.6 No Warranty
    
    
    21ARTICLE 10 REMEDIES AND INDEMNITIES
    
    
    2210.1 Consequential Damages
    
    
    2210.2 Limitation of Liability
    
    
    2210.3 Patheon
    
    
    22
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10.4 Penwest
    
    
    23ARTICLE 11 CONFIDENTIALITY
    
    
    2411.1 Confidentiality
    
    
    24ARTICLE 12 DISPUTE RESOLUTION
    
    
    2412.1 Commercial Disputes
    
    
    2412.2 Technical Dispute Resolution
    
    
    25ARTICLE 13 MISCELLANEOUS
    
    
    2513.1 Inventions
    
    
    2513.2 Intellectual Property
    
    
    2613.3 Insurance
    
    
    2613.4 Independent Contractors
    
    
    2613.5 No Waiver
    
    
    2613.6 Assignment
    
    
    2613.7 Force Majeure
    
    
    2613.8 Additional Product
    
    
    2713.9 Notices
    
    
    2713.10 Severability
    
    
    2813.11 Entire Agreement
    
    
    2913.12 Other Terms
    
    
    2913.13 No Third Party Benefit or Right
    
    
    2913.14 Use of Penwest Name
    
    
    2913.15 Governing Law
    
    
    2913.16 Language Clause
    
    
    2913.17 Execution in Counterparts
    
    
    29
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MANUFACTURING SERVICES AGREEMENT
 THIS MANUFACTURING SERVICES AGREEMENT Agreement th Effective Date
  PATHEON INC.,a corporation existing under the laws of Canada and having offices at 2100 Syntex Court, Mississauga, Ontario L5N 7K9, Canada,
 (Patheon),
  PENWEST PHARMACEUTICALS CO.,a corporation existing under the laws of the state of Washington,
USA, and having offices at 2981 Route 22, Suite 2, Patterson, NY
12563, USA,
 (Penwest).
  ARTICLE 1
 INTERPRETATION
 1.1 Definitions.
  Act
 Affiliate
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Annual Report
 Annual Product Review Report
 Authority
 Batch
 Bill Back Items Schedule C Schedule D
 Breach Notice
 Business Day
 Competitor of Patheon
 Components
 Confidentiality Agreement Schedule G
 Current Good Manufacturing Practices cGMPs GMP
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Deficiency Notice
 Delivery Date
 Effective Date
 EMEA
 Facility
 Failure to Supply
 FDA
 Firm Order
 First Firm Order
 Force Majeure Event
 Health Canada
 Incoterms 2000
 Initial Manufacturing Month
 Initial Manufacturing Period
 Initial Term
 Intellectual Property
 Invention
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Inventory
 Late Delivery
 Laws
 Manufacturing Process ® Schedule B-2
 Manufacturing Services Schedule B-1
 Party
 Patheon Intellectual Property
 Penwest Intellectual Property
 Price Schedule C Schedule C Schedule C
 Product(s) â Schedule A Schedule A
 Product Forecast and Extended Product Forecast
 Quality Agreement Schedule
E
 Recall
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Regulatory Authority
 Remediation Period
 RFID
 Specifications ® Schedule
A
 Technical Dispute
 Term
 Third Party
 Third Party IP Rights
 TIMERx â -N â
 TIMERx â -N Formulation â Schedule A
 Year
 1.2 Currency .
 Canadian
 1.3 Sections and Headings; Interpretation .
 this Agreement hereof herein hereunder
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1.4
    
    Singular Terms.
  1.5
    
    Schedules.
  Schedule A
    
    
    
    Product Specifications and FormulationSchedule B-1
    
    
    
    Manufacturing ServicesSchedule B-2
    
    
    
    Manufacturing Process and Process SchematicSchedule C
    
    
    
    Product PricesSchedule D
    
    
    
    Annual Stability Testing Protocol and CostsSchedule E
    
    
    
    Quality AgreementSchedule F
    
    
    
    Technical Dispute ResolutionSchedule G
    
    
    
    Confidentiality AgreementSchedule H
    
    
    
    Shipping Logistics Protocol
 ARTICLE 2
 PATHEONS MANUFACTURING SERVICES
 2.1
    
    Manufacturing Services.
 Schedule C Schedule D provided Schedule C
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provided however â
 ARTICLE 3
 PENWESTS OBLIGATIONS
 3.1
    
    Payment.
 Schedule C Schedule D
 ARTICLE 4
 PRICING AND COMPONENT COSTS
 4.1
    
    First Year Pricing.
 Schedule C
 4.2
    
    Price Adjustments  Subsequent Years Pricing.
 st
 (a)
    
    Manufacturing Costs. Patheon may adjust the Price for inflation, based
upon the [**], unless the Parties otherwise agree in writing. On or about [**] of each
Year, Patheon will give Penwest a statement setting forth the calculation for the
inflation adjustment to be applied in calculating the Price for the next Year.(b)
    
    Component Costs. If Patheon incurs an increase in Component costs
during the Year, it may increase the Price for the next Year [**]. Similarly, if
Patheon obtains a decrease in Component costs during the Year, it shall decrease the
Price for the next Year [**]. On or about [**] of each Year, Patheon will give Penwest
information about the [**], provided,
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howeverthat, subject to Section 4.5, Patheon
will not be required to give information to Penwest that is subject to obligations of
confidentiality between Patheon and its suppliers.(c)
    
    Pricing Basis. Penwest acknowledges that the Price in any Year is
quoted based upon the annual volume as set forth on Schedule C. Penwest
acknowledges and agrees, from and after Penwest places its first purchase order
pursuant to this Agreement, if the forecast for a Year significantly decreases (a
change of [**] percent ([**]%) or greater measured by volume) from the Product Forecast
for the prior Year, and Patheon can demonstrate that such decreased volume will result
in increased manufacturing costs to Patheon (other than due to increased Component
costs which are addressed separately in Section 4.2(b)), Patheon may adjust the Price
upward. Similarly, if the forecast for a Year significantly increases (a change of
[**]%) or greater measured by volume) from the Product Forecast for the prior Year, and
such increased volume will result in decreased manufacturing costs to Patheon (other
than due to decreased Component costs which are addressed separately in Section
4.2(b)), Patheon shall adjust the Price downward. Patheon shall provide Penwest with
evidence to reasonably demonstrate the Price adjustment, or (if applicable) to support
a finding of no Price adjustment; provided, howeverthat, subject to Section 4.5,
Patheon will not be required to give information to Penwest that is subject to
obligations of confidentiality between Patheon and its suppliers.
 st Schedule C
 4.3
    
    Price Adjustments  Current Year Pricing.
 Schedule C
 (a)
    
    Extraordinary Increases in Component Costs. If, at any time, market
conditions result in Patheons cost of Components being materially greater than normal
forecasted increases, then Patheon will be entitled to an adjustment to the Price for
any affected Product to compensate it for the increased Component costs. Changes
materially greater than normal forecasted increases will have occurred if: (i) the cost
of a Component increases by [**] percent ([**]%) or more of the cost for that Component
upon which the most recent fee quote was based; or (ii) the aggregate cost for all
Components required to manufacture a Product increases by [**] percent ([**]%) or more
of the total Component costs for the Product upon which the most recent fee quote was
based. If Component costs have been previously adjusted to reflect an increase in the
cost of one or more Components, the adjustments set out in (i) and (ii) above will
operate based on the last cost adjustment for the Components. The foregoing provisions
of this Section 4.3(a) notwithstanding, in no event shall Component costs be increased
pursuant to both this Section 4.3 and Section 4.2(b) with respect to the same Component
cost increase.(b)
    
    For a Price adjustment under this Section 4.3, Patheon will deliver to Penwest
a revised Schedule C and budgetary pricing information, adjusted Component
costs or other documents reasonably sufficient to demonstrate that a Price adjustment
is justified; provided howeverthat, subject to Section 4.5, Patheon will have no
obligation to provide any supporting documents that are subject to obligations of
confidentiality between
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Schedule C
 4.4
    
    Adjustments Due to Technical Changes.
  4.5
    
    Audit Rights.
 Schedule C Schedule D Schedule D mutatis mutandis
 4.6
    
    Limitation on Price Adjustments.
 st
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ARTICLE 5
 ORDERS, SHIPMENT, INVOICING, PAYMENT
 5.1
    
    Orders and Forecasts.
 (a)
    
    Rolling [**] Month Forecast. Within [**] days after the
Effective Date, Penwest will give Patheon a non-binding [**] month forecast of the
volume of Product that Penwest expects to order in the first [**] months of commercial
manufacture of the Product under this Agreement (the Product Forecast), it
being understood that Penwest anticipates its first Product order will be for a
Delivery Date no sooner than January 1, 2011. The Product Forecast will be routinely
updated by Penwest on or before the Friday of the 3rd week of
each month on a rolling forward basis and will be known as the Product Forecast.
The most recent [**] month Product Forecast will prevail.(b)
    
    Firm Orders for Initial Manufacturing Month. At least [**] months
before the start of commercial manufacture of the Product by Patheon pursuant to this
Agreement, Penwest will update the Product Forecast for the first [**] months of
manufacture of the Product (the Initial Manufacturing Period). The first
month of this updated Product Forecast (Initial Manufacturing Month) will
constitute a firm written order in the form of a purchase order or otherwise
(First Firm Order) by Penwest to purchase and, when accepted by Patheon, for
Patheon to manufacture the quantity of the Product. Penwest may cancel any Batches
from the First Firm Order at no cost if notice of cancellation is received by Patheon
[**] days or more before the scheduled Delivery Date under the First Firm Order.
Penwest may cancel any Batches from the First Firm Order if notice of cancellation is
received by Patheon more than [**] days but fewer than [**] days before the scheduled
Delivery Date under the First Firm Order, but Penwest will pay Patheon C$[**] for each
cancelled Batch. The Parties agree that this payment will be considered liquidated
damages for Patheons loss of manufacturing capacity due to Penwests cancellation of
manufacturing and will not be considered a penalty. If the First Firm Order is changed
or adjusted as described above, then the initial Product Forecast will also be adjusted
as necessary. The cancellation rights in this Section 5.1(b) are subject to Penwest
retaining responsibility for any costs or expenses actually incurred or irrevocably
committed by Patheon under this Agreement before it received notice of the
cancellation, providedthat Patheon agrees to use commercially reasonable efforts to
minimize Penwests costs under this Section 5.1(b).(c)
    
    Firm Orders Thereafter. After the Initial Manufacturing Month, on a
rolling basis during the Term of this Agreement, on or before the Friday of the third
week of each month, Penwest will issue an updated Product Forecast and the first [**]
months of that updated forecast will constitute a firm written order in the form of a
purchase order or otherwise (Firm Order) by Penwest to purchase and, when
accepted by Patheon, for Patheon to manufacture and deliver the agreed quantity of the
Products on a date not less than [**] months after the first day of the month
immediately following the date that the Firm Order is submitted. Firm Orders submitted
to Patheon will specify Penwests purchase order number, quantities by Product type,
monthly delivery schedule and Delivery Dates, and any other elements necessary to
ensure the timely manufacture and shipment of the Products. Upon Patheons acceptance
of a Firm Order, the quantities of Products ordered will be firm and binding on Penwest
and Patheon, and may not be reduced by
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Penwest. Patheon shall use commercially
reasonable efforts to meet any request by Penwest to increase the amount of Product to
be supplied pursuant to any Firm Order.(d)
    
    Two Year Forecast. On or before the 10th day of June of
each Year (or, in the case of the first Year of this Agreement, within [**] days after
the Effective Date), Penwest will give Patheon a written, non-binding two-year
forecast, broken down by quarters for the second year of the forecast, of the volume of
each Product Penwest then anticipates will be required to be manufactured and delivered
to Penwest during the two-year period (the Extended Product Forecast).(e)
    
    Acceptance of Firm Order. Patheon will accept Firm Orders by promptly
sending a written acknowledgement to Penwest; providedthat Patheons failure to
deliver a written acceptance of the purchase order within [**] Business Days after its
receipt of the Firm Order shall constitute Patheons deemed acceptance of the purchase
order. The acknowledgement will include, subject to confirmation from Penwest, the
Delivery Date for the Product ordered. Once agreed by the Parties pursuant to this
Section 5.1(e), the
Delivery Date may be amended by written agreement of the Parties or as set forth in
Section 5.1(b).
 5.2
    
    Orders.
  5.3
    
    Shipments.
 (a)
    
    Shipments of Product will be made [**] (INCOTERMS 2000) Facilitys loading
dock, unless otherwise mutually agreed. Risk of loss or of damage to Products will
remain with Patheon until Patheon loads the Products onto the carriers vehicle for
shipment at the Facility loading dock, at which time risk of loss or damage will
transfer to Penwest. Patheon will, in accordance with Penwests instructions and as
agent for Penwest, (i) arrange for shipping to be paid by Penwest and (ii) at Penwests
risk and expense, obtain any export licence or other official authorization necessary
to export the Products. Penwest will arrange for insurance and will select the freight
carrier used by Patheon to ship Products and may monitor Patheons shipping and freight
practices as they pertain to this Agreement. Products will be transported in
accordance with the Specifications.(b)
    
    Product shall not be shipped to Penwest or its designated shipping point unless
and until (i) all applicable Batch records, certificates of analysis and other
certificates have been provided to and reviewed by Penwest, and (ii) Penwests quality
assurance representative has performed Product release on such quantities of Product
for shipment, in the case of both (i) and (ii), in accordance with the procedures set
forth in the Quality Agreement. Penwest agrees that it shall review all Batch records
and other certificates within [**] Business Days after receipt of such documents from
Patheon.
 5.4
    
    On Time Delivery.
 (a)
    
    Patheon and Penwest understand that there may be uncertainties and necessary
adjustments in production schedules during the Initial Manufacturing Period. The
Parties
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agree that they will work together closely to expedite deliveries and manage the
scheduling of the initial Product launch. However, if, during the Initial
Manufacturing Period, Patheon is unable to deliver the quantity of Product ordered
under a Firm Order, within [**] Business Days after the scheduled Delivery Date (a
Late Initial Delivery Date), Penwest will receive a credit from Patheon
for the Initial Late Delivery that will be applied against the purchase price under
Penwests next Firm Order. The credit will be [**] percent ([**]%) of the Price of
the quantities of Product not delivered by Patheon under the Firm order on the
Initial Delivery Date (i.e. Penwest Credit = (quantity Ordered in the Firm Order 
Actual Delivery Quantities of Product) x Price x [**]%).(b)
    
    If, after the Initial Manufacturing Period, Patheon is unable to deliver the
quantity of Product ordered under a Firm Order on the Scheduled Delivery Date (a
Late Delivery), Penwest shall receive a credit from Patheon for the Late
Delivery, as specified in the following table, which will be applied against the
purchase price under the next Firm Order:
 If Scheduled Shipment Date Is:
    
    Delay Fee Due:More than [**] days after the scheduled Delivery Date
    
    [**]more than [**] days, but [**] days or less, after the scheduled Delivery Date
    
    [**][**] days or less after the scheduled Delivery Date
    
    [**]
 (c)
    
    A late delivery of less than [**] days will not be a material breach of this
Agreement by Patheon for the purposes of Section 8.2.(d)
    
    For clarity, a Late Delivery will not include any delay in shipment of Product
caused by events outside of Patheons reasonable control or ability to plan for,
including but not limited to a Force Majeure Event, a delay in Product release approval
from Penwest or unanticipated supply availability or shipment delays from approved
Component vendors. Promptly after becoming aware of potential disruptions or changes to
the normal availability of Components from approved vendors, Patheon shall provide
written notice thereof to Penwest, and Patheon shall thereafter use commercially
reasonable efforts, in consultation with Penwest, to increase Patheons inventory of
the applicable Component(s) or ordering lead time for the applicable Component(s).
 5.5 Invoices and Payment.
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ARTICLE 6
 PRODUCT CLAIMS, FAILURE TO SUPPLY AND RECALLS
 6.1 Product Claims.
 (a)
    
    Product Claims. Penwest has the right to reject any portion of any
shipment of Products that deviates from the Specifications, the Manufacturing Process,
cGMPs, or applicable Laws without invalidating any remainder of the shipment. Penwest
will inspect the Products manufactured by Patheon for obvious defects or damage upon
receipt, and will give Patheon written notice (a Deficiency Notice) of all
claims for Products that deviate from the Specifications, the Manufacturing Process,
cGMPs, or applicable Laws within [**] days after Penwests receipt thereof (or, in the
case of any defects not reasonably susceptible to discovery upon receipt of the
Product, within [**] days after discovery by Penwest or its customer, but not after the
expiration date of the Product). Should Penwest fail to give Patheon the Deficiency
Notice within the applicable [**] or [**] day period, then the delivery will be deemed
to have been accepted by Penwest on either the [**] or [**] day after delivery or
discovery, as applicable.(b)
    
    Determination of Deficiency. Upon receipt of a Deficiency Notice,
Patheon will have [**] days to advise Penwest by notice in writing that it disagrees
with the contents of the Deficiency Notice. If Penwest and Patheon fail to agree
within [**] days after Patheons notice to Penwest as to whether any Products
identified in the Deficiency Notice deviate from the Specifications, the Manufacturing
Process, cGMPs, or applicable Laws, then the Parties will mutually select an
independent laboratory to evaluate whether the Products deviate from the
Specifications, the Manufacturing Process, cGMPs, or applicable Laws. This evaluation
will be binding on the Parties. If the evaluation certifies that any Products deviate
from the Specifications, the Manufacturing Process, cGMPs, or applicable Laws, Penwest
may reject those Products in the manner contemplated in this Section 6.1 and [**]. If
the evaluation does not so certify for any of the Products, then Penwest will be deemed
to have accepted delivery of the Products on the [**] day after delivery (or, in the
case of any defects not reasonably susceptible to discovery upon receipt of the
Product, on the [**] day after discovery thereof by Penwest or its customer(s), but not
after the expiration date of the Product) and, as between Penwest and Patheon, [**].(c)
    
    Shortages. If a shipment of Product fails to conform to the ordered
quantity to be delivered, in addition to its obligations under Sections 5.4(a) and
5.4(b), Patheon shall replace such Product within [**] days after the applicable
Delivery Date, [**].(d)
    
    Notwithstanding the existence of a dispute concerning Product rejected by
Penwest, pending resolution of such dispute, Patheon shall, as promptly as possible,
but in any event within [**] days after issue by Penwest of a purchase order for
additional Product of
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the type and quantity claimed to be rejected as contemplated by this Section 6.1,
deliver such additional Product to Penwest.(e)
    
    Penwest acknowledges that the time frames to provide replacement Product
outlined in clauses (c) and (d) above are subject to Patheon being able to procure the
required Components for such additional Product; providedthat, promptly after the
first indication that a Product deficiency or shortage may occur, Patheon shall use
commercially reasonable efforts to obtain additional Component supply sufficient to
satisfy its actual or potential obligations to provide replacement Product in
accordance with clauses (c) and (d) above.
 6.2 Product Recalls and Product Returns.
 (a)
    
    Patheon and Penwest will each maintain records necessary to permit a Recall of
any Products delivered to Penwest or customers of Penwest. Each Party will promptly
notify the other by telephone (to be confirmed in writing) of any information which
might affect the marketability, safety or effectiveness of the Products or which might
result in the Recall or seizure of the Products. Upon receiving this notice or upon
this discovery, each Party will stop making any further shipments of any quantities of
the applicable Product in its possession or control until a decision has been made
whether a Recall or some other corrective action is necessary. As between the Parties,
the decision to initiate a Recall or to take some other corrective action, if any, will
be made and implemented by Penwest. Patheon shall cooperate with Penwest in the event
of any Recall, and shall provide such reasonable assistance in connection therewith as
Penwest may reasonably request.(b)
    
    Penwest will have the responsibility for handling all customer returns of
Product. Patheon will give Penwest any assistance that Penwest may reasonably require
to handle the returns.
 6.3 Patheons Responsibility for Defective and Recalled Products.
 Defective Product provided
 Recalls
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6.4 Failure to Supply.
 (a)
    
    A Failure to Supply shall have occurred under this Agreement under any of the
following circumstances (aFailure to Supply):
 (i)
    
    Patheon fails to deliver a shipment of Product by the Delivery
Date, and fails to replace such Product shipment within [**]) days after the
scheduled Delivery Date; or(ii)
    
    Patheon fails to ship the complete number of ordered Batches by
the Delivery Date, and Patheon fails to ship the remaining Batches within [**]
days after the scheduled Delivery Date, and such failure occurs (A) with
respect to Product shipments over [**] consecutive calendar quarters during any
Year, or (B) with respect to [**] or more Product shipments in any Year; or(iii)
    
    Product delivered to Penwest or to a Penwest customer is
determined to be defective for a reason set forth in the first Sentence of
Section 6.3(a), and there are [**] or more such deliveries of defective Product
in any one Year.
 (b)
    
    If a Failure to Supply occurs, then Penwest or its Affiliates, itself or on
behalf of its licensees or customers, may at its election, (i) require Patheon to
qualify, as soon as reasonably practicable and at Patheons cost, a second Patheon
facility to manufacture and supply Product to Penwest hereunder, it being understood
that Penwest shall have the right to approve such second Patheon facility, such
approval not to be unreasonably withheld or delayed; and/or (ii) retain a Third Party
to manufacture and supply the requirements of Penwest and its Affiliates, licensees
and customers requirements for Product.(c)
    
    Except as set forth in this Agreement, Patheon will not be liable to Penwest
nor have any responsibility to Penwest for any deficiencies in, or other liabilities
associated with, any Product manufactured by it (collectively, Product
Claims). For greater certainty, Patheon will have no obligation for any Product
Claims to the extent the Product Claim (i) is caused by deficiencies in the
Specifications as provided to Patheon by Penwest, the safety, efficacy, or
marketability of the Products or any distribution thereof; providedthat the Product
was manufactured in accordance with the Manufacturing Process, the Specifications,
cGMPs and applicable Laws, and conformed to the Specifications at the time of shipment;
(ii) results from a defect in a Component that is not reasonably discoverable by
Patheon using the test methods set forth in the Specifications, (iii) results from
Components supplied by Penwest that is not reasonably discoverable by Patheon using the
test methods set forth in the Specifications, (iv) is caused by actions of Third
Parties occurring after the Product is shipped by Patheon under Section 5.3, (v) is due
to packaging design or labelling defects or omissions for which Patheon has no
responsibility; providedthat the Product was manufactured in accordance with the
Manufacturing Process, the Specifications, cGMPs and applicable Laws, and conformed to
the Specifications at the time of shipment, (vi) is due to any unascertainable reason
despite Patheon having performed the Manufacturing Services in accordance with the
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Specifications, cGMPs, the Manufacturing Process and applicable Laws and despite
the Product having met the Specifications at the time of shipment, or (vii) is due
to a breach by Penwest of its obligations under this Agreement.
 6.5 Disposition of Defective or Recalled Products.
  6.6 Healthcare Provider or Patient Questions and Complaints.
  6.7 Sole Remedy.
  ARTICLE 7
 CO-OPERATION
 7.1 Quarterly Review.
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7.2 Governmental Agencies.
  7.3 Records and Accounting by Patheon.
  7.4 Inspection.
  7.5 Access to the Facility; Audit Rights.
 provided
 7.6 Notification of Regulatory Inspections.
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7.7 Reports.
  7.8 FDA Filings.
 (a)
    
    Regulatory Authority. As between the Parties, Penwest will have sole
responsibility for filing all documents with all Regulatory Authorities and taking any
other actions that may be required for the receipt or maintenance of Regulatory Authority
approval for the commercial manufacture of the Product. Patheon will assist Penwest, to
the extent consistent with Patheons obligations under this Agreement, to obtain Regulatory
Authority approval for the commercial manufacture of Product at the Facility as quickly as
reasonably possible.(b)
    
    Verification of Data. At least [**] Business Days prior to filing with the
Regulatory Authority any documentation which is or is equivalent to the FDAs Drug Master
File (DMF), Penwest will provide a designated representative of Patheon with a copy of any
portions of such DMF filing that contain data generated by Patheon pursuant to this
Agreement. Any such information disclosed to Patheon pursuant to this Section 7.8(b) shall
be the Confidential Information of Penwest and shall be used by Patheon solely to verify
that such portions of the DMF accurately describe the Patheon-generated data, Manufacturing
Services that Patheon has performed and the Manufacturing Processes that Patheon has
applied under this Agreement. Penwest shall consider in good faith any comments to such
DMF filing provided by Patheon, it being understood that Penwest shall have no obligation
to incorporate such comments into, or to modify, such DMF filings. Patheon will not assume
any liability or responsibility whatsoever for delays or otherwise should Penwest choose
not to incorporate comments or modify the DMF filings as per Patheons suggestion.(c)
    
    Penwest Responsibility. For clarity, the Parties agree that in reviewing the
documents referred to in clause (b) above, Patheons role will be limited to verifying the
accuracy of the description of the work undertaken or to be undertaken by Patheon. Subject
to the foregoing, Patheon will not assume any responsibility for the accuracy of any
application for receipt of an approval by a Regulatory Authority. Penwest is solely
responsible for the preparation and filing of the application for approval by the
Regulatory Authorities and any relevant costs will be borne by Penwest.(d)
    
    Inspection by Regulatory Authorities. If Penwest does not give Patheon the
documents requested under clause (b) above within the time specified and if Patheon
reasonably believes that Patheons standing with a Regulatory Authority may be jeopardized,
Patheon may, in its sole discretion, delay or postpone any inspection by the Regulatory
Authority until Patheon has reviewed the requested documents and is satisfied with their
contents.
 - 18 -




---



##### 



ARTICLE 8
 TERM AND TERMINATION
 8.1 Initial Term.
 Initial Term Term
 8.2 Termination for Cause.
 (a)
    
    Either Party at its sole option may terminate this Agreement upon written notice where
the other Party has failed to remedy a material breach of any of its representations,
warranties, or other obligations under this Agreement within 60 days following receipt of a
written notice (the Remediation Period) of the breach that expressly states that
it is a notice under this Section 8.2(a) (a Breach Notice).(b)
    
    Either Party at its sole option may immediately terminate this Agreement upon written
notice, but without prior advance notice, to the other Party if: (i) the other Party is
declared insolvent or bankrupt by a court of competent jurisdiction; (ii) a voluntary
petition of bankruptcy is filed in any court of competent jurisdiction by the other Party;
or (iii) this Agreement is assigned by the other Party for the benefit of creditors.(c)
    
    Penwest may terminate this Agreement as to any Product upon thirty (30) days prior
written notice if any Regulatory Authority takes any action, or raises any objection, that
prevents Penwest from importing, exporting, purchasing, or selling the Product. But if
this occurs, Penwest will still fulfill all of its obligations under Section 8.4 below.(d)
    
    Patheon may terminate this Agreement upon six (6) months prior written notice to
Penwest if Penwest assigns under Section 13.6 any of its rights under this Agreement to an
assignee that in the opinion of Patheon acting reasonably and in good faith is (i) not a
credit worthy substitute for Penwest or (ii) is a Competitor of Patheon. As used in this
Agreement, Competitor of Patheon means a corporation that [**].
 8.3 Termination by Penwest.
 (a)
    
    Penwest may terminate this Agreement at any time upon twelve (12) months written notice
to Patheon.(b)
    
    Penwest may terminate this Agreement by written notice to Patheon at any time (i) if
Patheon is unable to successfully validate the Manufacturing Process, or (ii) if Patheon
has not obtained approval as a manufacturer of the Product, including approval of the
Patheon Facility by the FDA or any other applicable Regulatory Authority, on or before
December 31, 2010.
 - 19 -




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##### 



(c)
    
    Penwest will give at least six (6) months advance notice if it intends to no longer
order Manufacturing Services for a Product due to the Products discontinuance in the
market.
 8.4 Obligations on Termination.
  (a)
    
    Penwest will take delivery of and pay for all undelivered Products that (i) are
manufactured or packaged under a Firm Order, (ii) conform to the Specifications at the
time of shipment, and (iii) were manufactured in accordance with the Manufacturing
Process, cGMP and applicable Laws, at the Price in effect at the time the Firm Order
was placed;(b)
    
    Penwest will satisfy the purchase price payable under Patheons orders with
suppliers of Components, if the orders were made by Patheon in reliance on Firm Orders;(c)
    
    Penwest acknowledges that no Competitor of Patheon will be permitted access to
the Facility; and(d)
    
    Penwest will make commercially reasonable efforts, at its own expense, to
remove from Patheon site(s), within [**] days after the effective date of termination
any Product or work-in-process produced or held by Patheon for the manufacture of the
Product and located at a Patheon site or that is otherwise under Patheons care and
control (Penwest Property). If Penwest fails to remove the Penwest Property
within [**] days following the completion, termination, or expiration of the Agreement
Penwest will pay Patheon $[**] per pallet, per month, one pallet minimum ($[**] per
pallet, per month, one pallet minimum, for any of the Penwest Property that contains
controlled substances or requires refrigeration) thereafter for storing the Penwest
Property and will assume any Third Party storage charges invoiced to Patheon regarding
the Penwest Property. Patheon will invoice Penwest for the storage charges as set
forth in Section 5.5 of this Agreement.
  ARTICLE 9
 REPRESENTATIONS, WARRANTIES AND COVENANTS
 9.1 Authority.
  9.2 Penwest Warranties.
 - 20 -




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##### 



(a)
    
    Non-Infringement.
 (i)
    
    Penwest has the right to disclose the Specifications to Patheon;(ii)
    
    Except with respect to the Patheon Intellectual Property as to which
Penwest makes no representations or warranties, Penwest is not aware of any
Intellectual Property of any Third Party that is necessary for Penwest to make, have
made, use or sell the Product, as contemplated hereby;(iii)
    
    Penwest is not aware of any action or other legal proceedings alleging
that Third Party Intellectual Property rights would be infringed by the manufacturing
of the Product as contemplated by this Agreement; and
 (b)
    
    Quality and Compliance.
 (i)
    
    the Specifications for all Products conform to all applicable cGMPs and
applicable Laws.
 9.3 Patheon Warranties.
  (a)
    
    All Product manufactured in accordance with this Agreement will (i) be manufactured in
accordance with the Specifications, the Manufacturing Process, cGMPs, and all Regulatory
Approvals and Laws (to the extent applicable at the time of Manufacture), (ii) will conform
to the Specifications at the time of shipment, and (ii) be delivered free from all liens,
encumbrances, restrictions and security interests;(b)
    
    any Patheon Intellectual Property used by Patheon to perform the Manufacturing Services
(i) is Patheons or its Affiliates unencumbered property, (ii) may be lawfully used by
Patheon, and (iii) does not infringe any Third Party IP Rights;(c)
    
    Patheon shall hold, and shall continue to hold during the Term, all material licenses
necessary or required for the performance of the Manufacturing Services and the performance
of its obligations hereunder; and(d)
    
    As of the Effective Date, Patheon is not aware of Intellectual Property of any Third
Party that is necessary for Patheon to manufacture the Product in accordance with the
Manufacturing Process as contemplated by this Agreement;(e)
    
    the Facility, all equipment and tooling utilized in the manufacture of Products
hereunder, and the procedures and processes (including installation, operation and
performance qualifications) instituted by Patheon in connection herewith are, and shall
continue during the Term, to be in material compliance with all applicable Laws and
maintained in good operating condition.
 - 21 -




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##### 



9.4 Debarred Persons.
  9.5 Permits.
   9.6 No Warranty.
 PATHEON MAKES NO WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN
THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. PATHEON MAKES NO WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE OR WARRANTY OF MERCHANTABILITY FOR THE PRODUCT.
 ARTICLE 10
 REMEDIES AND INDEMNITIES
 10.1 Consequential Damages.
  - 22 -




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##### 



10.2 Limitation of Liability.
  10.3 Patheon
 (a)
    
    Patheon agrees to defend, indemnify, and hold Penwest, its officers, employees,
and agents harmless against any and all losses, damages, costs, claims, demands,
judgments and liability to, from and in favour of Third Parties (together
Losses) resulting from, or relating to any claim of personal injury or
property damage to the extent that the injury or damage is the result of (i) a failure
by Patheon to perform the Manufacturing Services in accordance with the Specifications,
the Manufacturing Process, cGMPs, and applicable Laws, (ii) the gross negligence or
wilful misconduct of Patheon, or (iii) a breach of this Agreement by Patheon, including
any representation or warranty of Patheon contained herein, and in each case, except to
the extent that the losses, damages, costs, claims, demands, judgments, and liability
are due to the negligence or wrongful act(s) of Penwest, its officers, employees,
agents, or Affiliates.(b)
    
    If Penwest intends to claim indemnification under Section 10.3(a), Penwest
shall promptly notify Patheon in writing of any claim, lawsuit or other action in
respect of which Penwest intends to claim such indemnification, and shall use
commercially reasonable efforts to mitigate the effects of the claim. Penwest shall
permit Patheon, at its discretion, to settle any such claim, lawsuit or other action
and agrees to the complete control of such defense or settlement by Patheon; provided,
however, that in order for Patheon to exercise such rights, such settlement shall not
adversely affect Penwests rights under this Agreement or impose any obligations on
Penwest in addition to those set forth herein. No such claim, lawsuit or other action
shall be settled without the prior written consent of the Patheon, and Patheon shall
not be responsible for any legal fees or other costs incurred other than as provided
herein. Penwest shall cooperate fully with Patheon and its legal representatives in
the investigation and defense of any claim, lawsuit or other action covered by this
indemnification, all at the reasonable expense of Patheon. Penwest shall have the
right, but not the obligation, to be represented by counsel of its own selection and
expense.
 10.4 Penwest.
 (a)
    
    Penwest agrees to defend, indemnify, and hold Patheon, its officers, employees,
and agents harmless against any and all Losses resulting from any claim of personal
injury or property damage to the extent such injury or damage is the result of (i) a
breach of this Agreement by Penwest, including any representation or warranty of
Penwest contained herein, (ii) any claim that the Specifications or the Manufacturing
Process for the Product do not conform to all applicable cGMPs and other applicable
Laws, (iii) any claim that Product conforming to the Specifications, and labelled and
manufactured in accordance with the Specifications, the Manufacturing Process, cGMPs
and applicable Laws, is not safe for human consumption, (iv) any claim that the
composition or method of use of the Product infringes the intellectual property rights
of any Third Party, or (v) the gross
 - 23 -




---



##### 



negligence or wilful misconduct of Penwest, except to the extent in each case that
the losses, damages, costs, claims, demands, judgments, and liability are due to the
negligence or wrongful act(s) of Patheon, its officers, employees, or agents.(b)
    
    If Patheon intends to claim indemnification under Section 10.4(a), Patheon
shall promptly notify Penwest in writing of any claim, lawsuit or other action in
respect of which Patheon intends to claim such indemnification, and shall use
commercially reasonable efforts to mitigate the effects of the claim. Patheon shall
permit Penwest, at its discretion, to settle any such claim, lawsuit or other action
and agrees to the complete control of such defense or settlement by Penwest; provided,
however, that in order for Penwest to exercise such rights, such settlement shall not
adversely affect Patheons rights under this Agreement or impose any obligations on
Patheon in addition to those set forth in this Agreement. No such claim, lawsuit or
other action shall be settled without the prior written consent of Penwest, and Penwest
shall not be responsible for any legal fees or other costs incurred other than as
provided herein. Patheon shall cooperate fully with Penwest and its legal
representatives in the investigation and defense of any claim, lawsuit or other action
covered by this indemnification, all at the reasonable expense of Penwest. Patheon
shall have the right, but not the obligation, to be represented by counsel of its own
selection and expense.
 ARTICLE 11
 CONFIDENTIALITY
 11.1 Confidentiality.
 provided SEC
 - 24 -




---



##### 



ARTICLE 12
 DISPUTE RESOLUTION
 12.1 Commercial Disputes.
  12.2 Technical Dispute Resolution.
 Technical
Dispute Schedule F Schedule F
 ARTICLE 13
 MISCELLANEOUS
 13.1 Inventions.
 (a)
    
    For the term of this Agreement, Penwest hereby grants to Patheon a
non-exclusive, paid-up, royalty-free, non-transferable license of Penwests
Intellectual Property which Patheon must use in order to perform the Manufacturing
Services.
 - 25 -




---



##### 



(b)
    
    All Penwest Intellectual Property, will be the exclusive property of Penwest.
Patheon hereby assigns its entire right, title and interest in and to the Penwest
Intellectual Property to Penwest, and agrees to execute all documents and take such
other actions as are reasonably necessary to effectuate the forgoing assignment
obligations.(c)
    
    All Patheon Intellectual Property will be the exclusive property of Patheon.
Patheon hereby grants to Penwest a perpetual, irrevocable, non-exclusive, paid-up,
royalty-free, transferable license to under the Patheon Intellectual Property used by
Patheon to in the performance of the Manufacturing Services or the manufacture of
Products pursuant to this Agreement, to manufacture or have manufactured Product(s).
Upon the reasonable request of Penwest, Patheon shall transfer to Penwest any tangible
manifestations of the Patheon Intellectual Property, and shall provide Penwest with
reasonable access to Patheon employees or agents, to enable Penwest to exercise the
foregoing license.(d)
    
    Each Party will be solely responsible for the costs of filing, prosecution, and
maintenance of patents and patent applications on its own Inventions.(e)
    
    Either Party will give the other Party written notice, as promptly as
practicable, of all Inventions which can reasonably be deemed to constitute
improvements or other modifications of the Products or processes or technology owned or
otherwise controlled by the Party.
 13.2 Intellectual Property.
  13.3 Insurance.
  - 26 -




---



##### 



13.4 Independent Contractors .
  13.5 No Waiver.
  13.6 Assignment.
 provided provided
 13.7 Force Majeure.
 (a)
    
    Neither Party will be liable for the failure to perform its obligations under
this Agreement if the failure is caused by an event beyond that Partys reasonable
control and is not caused by the act or omission of that Party, including strikes or
other labour disturbances, lockouts, riots, quarantines, communicable disease
outbreaks, wars, acts of terrorism, fires, floods, storms, interruption of or delay in
transportation, or lack of or inability to obtain fuel, power or components or
compliance with any order or regulation of any government entity acting within colour
of right (a Force Majeure Event). A Party claiming a right to excused
performance under this Section 13.7 will immediately notify the other Party in writing
of the extent of its inability to perform, which notice will specify the event beyond
its reasonable control that prevents the performance. Neither Party will be entitled
to rely on a Force Majeure Event to relieve it from an obligation to pay money
(including any interest for delayed payment) which would otherwise be due and payable
under this Agreement.(b)
    
    A Party shall be deemed not to be in default with respect to non-performance of
any of its obligations under this Agreement, if and so long as such non-performance is
due in whole or in some material way to an event of Force Majeure and that Party has
used commercially reasonable efforts to remove the event of Force Majeure and to
perform its obligations under the Agreement.(c)
    
    Subject to Section 13.7(b), if Patheon is unable to supply Penwest with its
requirements of Products by reason of Force Majeure, Force Majeure shall excuse
Patheons performance until the Force Majeure has ceased and for a reasonable period of
time thereafter, to allow Patheon to restore itself to the position it was in with
respect to the manufacture of Products immediately prior to the Force Majeure. Within
ninety (90) days
 - 27 -




---



##### 



of notification by Patheon that it is able to resume the necessary supply of the
Products to Penwest, Penwest shall resume obtaining its requirements of Product from
Patheon pursuant to this Agreement. Penwest shall be excused from its obligation
set forth in Section 2.1 hereof during Patheons inability to manufacture the
Products as a result of a Force Majeure event, until the cessation of such Force
Majeure event in accordance with this Section 13.7(c) and thereafter as specified in
Section 2.1. Patheon shall suffer no penalty or incur any liability for its
inability to perform hereunder by reason of Force Majeure.(d)
    
    If a Party fails to perform any of its obligations under this Agreement by
reason of Force Majeure and such non-performance continues for a period of one hundred
and eighty (180) days after the first occurrence of the event of Force Majeure, the
other Party may terminate this Agreement by providing written notice to that effect to
the non-performing Party. In the event of such termination, both Parties respective
rights and obligations under this Agreement shall terminate except for any amounts
previously due and owing by one Party to the other and except for any other obligations
which this Agreement expressly provides shall survive termination.
 13.8 Additional Product.
 Schedules A B-1 B-2 C D
 13.9 Notices.
  If to Penwest:Penwest Pharmaceuticals Co., Inc.2981 Route 22, Suite 2Patterson, NY 12563-2335Attn.: Kevin Fitzmaurice,Director, Technical OperationsFacsimile: (845) 878-3420
 - 28 -




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##### 



A Party may change its address for notice by notifying the other Party at any time
in accordance with the provisions of this Section 13.9.If to Patheon:Patheon Inc.2100 Syntex CourtMississauga, Ontario L5N 7K9CanadaAttention: Law DepartmentTelecopier No.: 905.812.6613With a copy to:Patheon Inc.4721 Emperor BoulevardResearch Triangle Park,NC 27703Attention: General CounselTelecopier No.: 919-474-2269Email address: Doaa.Fathallah@patheon.com
  13.10 Severability.
  13.11 Entire Agreement.
  13.12 Other Terms.
  - 29 -




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##### 



13.13 No Third Party Benefit or Right.
  13.14 Use of Penwest Name.
  13.15 Governing Law.
  13.16 Language Clause.
  13.17 Execution in Counterparts.
  - 30 -




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##### 



PATHEON INC.by
    
    /s/ Eric W. Evansby
    
    Eric W. Evans, Chief Financial OfficerPENWEST PHARMACEUTICALS CO.by
    
    /s/ Amale Hawiby
    
    Amale Hawi, SVP, Pharmaceutical Development
 - 31 -




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##### 



SCHEDULE A   PRODUCT SPECIFICATIONS AND FORMULATION
   A-1




---



##### 



SCHEDULE B-1   Manufacturing Services
 Quality Control and Quality Assurance
 Components
 Packaging
 Bill Back Items
 Manufacturing Assumptions â
  
    
    There will be [**]. Final blending will be performed in the [**].
    
    Single Batch manufacturing runs are anticipated. Each Batch will yield approximately [**]
kilograms of TIMERxâ-N.
    
    Patheon assumes that the TIMERxâ-N Formulation does not absorb/adsorb to
any metal, glass or other components used during the processing and analytical testing of the
Batch.
    
    Patheon assumes the current cleaning procedure is adequate and full cleaning occurs after
each campaign.
 B-1 - 1




---



##### 




    
    A manufacturing yield of [**] percent ([**]%) is expected based on Penwests prior
experience with the Manufacturing Process.
    
    Patheon shall conduct finished Product testing on all Product Batches, in accordance with
the Manufacturing Process, cGMPs and Specifications, such testing to include: [**].
    
    As per Penwest, granulation will be bulk packaged into approximately [**] drums double
lined with [**].
 Stability Samples and Testing
 Packing and Shipping â
 B-1 - 2




---



##### 



SCHEDULE B-2   Manufacturing Processes and Process Schematic
 [**]
  C-1




---



##### 



PRODUCT PRICES
 Product
    
    Year 2010 Prices/per kgTIMERxâ-N ([**] kg/Batch)
    
    C$[**]/kg*
 
 *
    
    Initial pricing assumes an annual volume of [**] kg The following cost items are included in the Price for the Products :
 
    
    Product manufactured, tested and packaged under the Agreement
    
    Standard certificate of analysis (COA)
    
    Standard certificate of compliance (COC)
    
    GMP required retention samples
    
    Copies of deviation reports
    
    Batch Production Records (BPR)/Lot Packaging Records (LPR)
copies for all Batches produced
    
    One label copy change per Year
    
    BPR/LPR changes, one major change per Year
    
    Common HPLC/GC columns, reagents, and lab supplies
    
    Copy of the Annual Product Review Report
    
    Product Approval Inspection (PAI) and copy of FDA Report
    
    Simple, routine statistical review
    
    Storage of Production Test Record (PTR) batches and other experimental
batches for three months
    
    Storage of registration batches and other experimental batches for two years or
until Product approval, whichever comes first
    
    Routine sampling and analysis as part of Product manufacture and release
    
    [**]
 B-1 - 2




---



##### 



SCHEDULE D   ANNUAL STABILITY TESTING PROTOCOL AND COSTS
 Product Information
 Product Name/Strength: TIMERx-N
    
    Study Initiation:Sample Type:GMP  specification #:Product Lot #
    
    Primary Packaging: [**]Batch Size: [**] Kg
    
    Secondary Packaging:[**]Manufacturer:
    
    Packager:
 Storage Conditions
 Condition
    
    12 month
    
    24 month
    
    36 month
    
    48 month
    
    60 month[**]
    
    [**]
    
    [**]
    
    [**]
    
    [**]
    
    [**]Other:
 Test Requirements
 All of the following tests are performed at each time point:
 [**].
 Sample Requirements
 Condition
    
    12 month
    
    24 month
    
    36 month
    
    48 month
    
    60 month
    
    Total[**]
    
    [**]
    
    [**]
    
    [**]
    
    [**]
    
    [**]
    
    [**]Other:Grand Total:
    
    
    
    
    
    
    
    
    
    
    
    [**]
 Comments 
*[**]
    
    Approvals[**].
    
    Pharmaceutics
    

    DateQA/QC
    
    Date
 D-1




---



##### 



1. 2010 Annual Stability (FUST)
  Note:
  
    
    [**]
    
    
    
    [**]
    
    [**]
    
    
    
    [**]
    
    [**]
    
    
    
    [**]
    
    [**]
    
    
    
    [**]
  D-2




---



##### 



2. Fee Summary for Overall Budget
 BUDGET SUMMARY
 Penwest Pharmaceutical Company
TIMERx-N
 THE FOLLOWING COSTS ARE ALL QUOTED IN: USD
 All amounts quoted are valid for [**] days from the date of this Proposal.
 STABILITY  COMMERCIAL
    
    USD
 ACTIVITY
    
    
    
    PRICENumber of LotsTotal SamplesSubtotalProtocol Generation
    
    $[**]
 Pullpoint Month
    
    T = 1
    
    T = 3
    
    T = 6
    
    T = 9
    
    
    T = 12
    
    
    T = 18
    
    
    T = 24
    
    
    
    T = 36
    
    
    
    T = 48
    
    
    
    T = 60[**]
    
    
    
    
    
    
    
    
    
    
    x
    
    
    
    
    
    x
    
    
    
    x
    
    
    
    x
    
    
    
    xSamples per pullpoint
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Microbiology
    
    
    
    
    
    
    
    
    
    
    x
    
    
    
    
    
    x
    
    
    
    x
    
    
    
    x
    
    
    
    xCost per pullpoint
(Milestone Price)
    
    [**]
    
    $[**]
    
    $[**]
    
    $[**]
    
    $
    [**]
    
    
    $[**]
    
    $
    [**]
    
    
    $
    [**]
    
    
    $
    [**]
    
    
    $
    [**]Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    [**]BUDGET TOTAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    USD
    
    $
    [**]
 D-3




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##### 



SCHEDULE E
 Quality Agreement  Commercial Product
  Penwest Pharmaceuticals Co.,    Penwest
  Patheon Inc.,    Patheon




---



##### 



TABLE OF CONTENTS
 SECTION 1: PREMISES AND AGREEMENT
    
    
    3SECTION 2: RESPONSIBILITIES TABLE
    
    
    3SECTION 3: GENERAL
    
    
    5SECTION 4: DESCRIPTION OF RESPONSIBILITIES
    
    
    6SECTION 5: APPENDICES
    
    
    20
 APPENDIX A:
    
    PRODUCT(S)APPENDIX B:
    
    QUALITY CONTACTSAPPENDIX C:
    
    PATHEON APPROVED VENDOR LISTAPPENDIX D:
    
    CLIENT APPROVED VENDOR LISTAPPENDIX E:
    
    PATHEON APPROVED CONTRACT LABORATORIES LIST
 Page 2 of 25




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##### 



SECTION 1: PREMISES AND AGREEMENT
 PREMISES ® MSA Technology Transfer
Agreement Quality Agreement Appendix A
    AGREEMENT
 SECTION 2: RESPONSIBILITIES TABLE
  Section No.
    
    Subject / Terms
    
    Penwest
    
    Patheon4.1 Quality Management4.1.1
    
    cGMP, Health and Safety
Compliance
    
    
    X
    
    
    X4.1.2
    
    Penwest Audit Rights
    
    
    X4.1.3
    
    Subcontracting
    
    
    (X
    )
    
    X4.1.4
    
    Self-Inspection
    
    
    
    
    
    X
 Page 3 of 25




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##### 



Section No.
    
    Subject / Terms
    
    Penwest
    
    Patheon4.2 Regulatory Requirements4.2.1
    
    Permits and Manufacturing
License(s)
    
    
    
    
    
    X4.2.2
    
    Regulatory Filing /Registration
Change Control
    
    
    X
    
    
    (X)4.2.3
    
    Regulatory Compliance
    
    
    
    
    
    X4.2.4
    
    Government Agency
Inspections, Communications
and Requisitions
    
    
    (X
    )
    
    X4.3 Component Control4.3.1
    
    Test Methods and
Specifications
    
    
    X
    
    
    (X)4.3.2
    
    Component Destruction
    
    
    (X
    )
    
    X4.3.3
    
    Vendor Audit Responsibility
    
    
    X
    
    
    X4.3.4
    
    Penwest Furnished Components
    
    
    X4.3.5
    
    Incoming Component Release
    
    
    
    
    
    X4.4 Building, Facilities, Utilities and Equipment4.4.1
    
    General
    
    
    
    
    
    X4.4.2
    
    Equipment, Calibration and
Preventative Maintenance
    
    
    
    
    
    X4.4.3
    
    Environmental Monitoring
Program
    
    
    
    
    
    X4.5 Product Controls4.5.1
    
    Master Batch Record
    
    
    (X
    )
    
    X4.5.2
    
    Reprocessing and Rework
    
    
    (X
    )
    
    X4.5.3
    
    Personnel Training
    
    
    
    
    
    X4.6 Packaging, Labeling and Printed Components4.6.1
    
    Packaging Documentation
    
    
    (X
    )
    
    X4.6.2
    
    Printed Components and Artwork
    
    
    X
    
    
    (X)4.6.3
    
    Test Methods
    
    
    X
    
    
    (X)4.7 Exception Reports (Deviations / Investigations)4.7.1
    
    Manufacturing Instruction
Deviations
    
    
    (X
    )
    
    X4.7.2
    
    Notification of Deviations
    
    
    
    
    
    X4.8 Release of Product4.8.1
    
    Test Methods and
Specifications
    
    
    X
    
    
    (X)4.8.2
    
    Batch Release for Shipment
    
    
    
    
    
    X4.8.3
    
    Certificate of Compliance
    
    
    
    
    
    X4.8.4
    
    Product Release
    
    
    X4.9 Validation
 Page 4 of 25




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Section No.
    
    Subject / Terms
    
    Penwest
    
    Patheon4.9.1
    
    Master Validation Plan
    
    
    (X
    )
    
    X4.9.2
    
    Cleaning Validation Program
    
    
    (X
    )
    
    X4.9.3
    
    Analytical Method and Process
Transfer
    
    
    X4.10 Change Control4.10.1
    
    General
    
    
    X
    
    
    X4.11 Documentation4.11.1
    
    Record Retention
    
    
    
    
    
    X4.12 Laboratory Controls4.12.1
    
    Specifications and Test
Methods
    
    
    X
    
    
    X4.12.2
    
    Out of Specifications (OOS) /Out
of Trend (OOT)
    
    
    (X
    )
    
    X4.12.3
    
    Method Transfer of Validated
Methods
    
    
    X
    
    
    X4.13 Stability4.13.1
    
    Sample Storage
    
    
    
    
    
    X4.13.2
    
    Stability Studies and Protocol
    
    
    X
    
    
    X4.13.3
    
    Stability Failures
    
    
    (X
    )
    
    X4.13.4
    
    Termination of the MSA or the
Technology Transfer Agreement
    
    
    
    
    
    X4.14 Annual Product Review4.14.1
    
    General
    
    
    X
    
    
    (X)4.15 Storage and Distribution4.15.1
    
    General
    
    
    
    
    
    X4.15.2
    
    Product Storage and Shipment
Changes
    
    
    (X
    )
    
    X4.15.3
    
    Product Quarantine
    
    
    
    
    
    X4.16 Product Complaints4.16.1
    
    Complaint Investigation
    
    
    X
    
    
    (X)4.17 Product Recall4.18 Retention Samples4.18.1
    
    Component Retention Samples
    
    
    
    
    
    X
 SECTION 3: GENERAL
 3.1
    
    Any communications about the subject matter of this Agreement will be directed, in the first
instance, to the person(s) identified in Appendix B. A Party may change its designed
representatives identified on Appendix B by written notice to the other Party in
accordance with Section 13.9 of the MSA.
 Page 5 of 25




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##### 



3.2
    
    If any provision of this Agreement should be or found invalid, or unenforceable by applicable
Law, the rest of the Agreement will remain valid and binding and the Parties will negotiate a
valid provision which meets as close as possible the objective of the invalid provision.3.3
    
    Any amendment of this Agreement will be made in writing and signed by both Parties; provided
that (i) either Party may change its designated representative(s) identified on Appendix
B by written notice to the other Party in accordance with Section 13.9 of the MSA.3.4
    
    This Quality Agreement will become effective on the Effective Date (set forth on the cover
page of this Agreement) and will remain in effect until the termination or expiration of both
the Technology Transfer Agreement and the MSA (the Term).
 SECTION 4: DESCRIPTION OF RESPONSIBILITIES
 4.1
    
    Quality Management.
 4.1.1
    
    cGMP, Health and Safety Compliance.Patheon will conduct operations in compliance with all applicable Laws, including
environmental, occupational health and safety Laws.
 4.1.2
    
    Penwest Audit Rights.Patheon will give Penwest and its customers reasonable access at mutually
agreeable times to the areas of the Manufacturing Facility in which the Product is
manufactured, stored, handled, tested or shipped to permit Penwest and its
customers to verify that the Manufacturing Services are being performed in
accordance with the Specifications, cGMPs and applicable Laws. Penwests audit
right (as described above) is limited to one audit each calendar year for up to
[**] calendar days and involving no more than [**] auditors; provided that Penwest
and its customers shall have the right to conduct additional for-cause audits.
Penwest may request additional cGMP-type audits, additional audit days, or the
participation of additional auditors subject to payment. The fees associated with
these additional cGMP audits are specified in the MSA. The right of access set
forth in this Section 4.1.2 will not include a right to access or inspect Patheons
financial records.
 4.1.3
    
    Subcontracting.Patheon shall not have the right to subcontract, in whole or in part, its
obligations under this Quality Agreement, without the prior written consent of
Penwest, which consent Penwest may withhold
 Page 6 of 25




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##### 



in its sole discretion. Appendix E lists the Patheon approved contract
laboratories list.
 4.1.4
    
    Self-Inspection.Patheon will perform self-inspections of its premises, facilities, and processes
used to manufacture, package, test, and store Penwests Components and/or finished
Products in accordance with Patheons written standard operating procedures
(SOPs) to ensure compliance with cGMP and this Quality Agreement.
 4.2
    
    Regulatory Requirements.
 4.2.1
    
    Permits and Manufacturing Licenses.Patheon will obtain and maintain the appropriate manufacturing license(s) to enable
Patheon to perform its obligations under the MSA, the Technology Transfer Agreement
and this Agreement, as set forth in Sections 9.3(e) and 9.5 of the MSA and in
Sections 10.2(b) and 10.2(c) of the Technology Transfer Agreement.
 4.2.2
    
    Regulatory Filing / Registration Change Control.Penwest will determine whether changes to the Product or related to the Product
will impact the current DMF and will apply for and receive approval for any
required manufacturing amendment, change or addition to the Product DMF. Upon
request, Patheon will provide assistance in the preparation and review of pertinent
sections of new or supplemental regulatory applications before filing. Penwest
will provide Patheon with copies of relevant sections of the Product DMF filings,
as set forth in Section 7.8(b) of the MSA and Section 11.2 of the Technology
Transfer Agreement. Penwest is responsible for all communications with Regulatory
Authorities as well as for the approval, maintenance, and updating of the current
DMF.
 4.2.3
    
    Regulatory Compliance.Patheon will ensure that Product(s) are manufactured and tested in strict
compliance with cGMP for the manufacture of finished Product) as applicable,
Regulatory Approvals and applicable Laws.
 4.2.4
    
    Government Agency Inspections, Communication and Requisitions.Patheon will permit all relevant inspections by Regulatory Authorities of premises,
procedures, and documentation.
 Page 7 of 25




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Patheon will notify Penwest within three (3) Business Days after receipt of any
notice of inspection from a Regulatory Authority and within one (1) Business Day
after any Regulatory Authority request for Product samples, Batch documentation, or
other information related to the Product.Patheon will notify Penwest within one (1) Business Day after receipt of any Form
483s warning letter or the like from any Regulatory Authority that relates to the
Product; or if the supply of Product will be affected, or if the facilities used to
produce, test or package the Product will be affected.The responses from Patheon related to the Product will be reviewed and approved by
Penwest prior to submission to the Regulatory Authority.
 4.3
    
    Component Control.
 4.3.1
    
    Test Methods and Specifications.Penwest will give Patheon a copy of the Specifications and test methods to be used
if Penwest issues Component Specifications. Patheon will create internal test
methods and specifications in support of the Components; provided that all
QC testing for Components will be conducted by Patheon using the methods and
Specifications provided by Penwest to Patheon, or otherwise approved by Penwest in
writing. Raw materials used in manufacture of Products hereunder shall be released
as per USP/NF/EP or to Penwests specifications, as approved in writing by Penwest.
 4.3.2
    
    Component Destruction.Patheon has the right to either return to Penwest or dispose of any outdated or
rejected Components. If Components are disposed of, disposal will be consistent
with the nature of the Components and sent to a permitted waste disposal facility.
Prior to such disposal:
 Page 8 of 25




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(i)
    
    Patheon will send notice to Penwest about Patheons intent to
dispose of the Component. If no direction is received from Penwest, Patheon
will dispose of the Component no sooner than [**] days after the date of the
notice.(ii)
    
    The Components will be disposed and destroyed in compliance
with local environmental regulations and other applicable Laws, and performed
in a secure and legal manner that prevents unauthorized use or diversion.
  4.3.3
    
    Vendor Audit Responsibility.
 (i)
    
    Excipient Vendors:
 a.
    
    If Penwest stipulates an excipient vendor,
Penwest will audit and approve the manufacturers/supplier and ensure
cGMP compliance in accordance with Section 4.3.4 of this Agreement.
The Penwest stipulated vendor(s) will be included on Penwests
approved vendor list (attached hereto as Appendix D).b.
    
    If Patheon stipulates the excipient vendor,
Patheon will audit and approve the manufacturers/supplier and ensure
cGMP compliance in accordance with Patheons SOP. The Patheon
stipulated vendor(s) will be included on Patheons approved vendor
list (attached hereto as Appendix C).
 (ii)
    
    Packaging Component Vendors:
 a.
    
    If Penwest stipulates a packaging Component
vendor, Penwest will audit and approve the manufacturer/supplier and
ensure cGMP compliance. The Penwest stipulated vendor(s) will be
included on the approved vendor list (attached hereto as Appendix
D).b.
    
    If Patheon stipulates the packaging
Component vendor, Patheon will audit and approve the
manufacturer/supplier and ensure cGMP compliance in accordance with
Patheons SOP. The Patheon stipulated vendor(s) will be included on
the approved supplier list (Appendix C).
 Page 9 of 25




---



##### 



4.3.4
    
    Penwest Furnished Components.Penwest is responsible for vendor qualification of Penwest furnished Components and
for providing a certificate of compliance confirming the following:
 (i)
    
    That the Components are compliant with the provisions
outlined in the Note for Guidance on minimizing the risk of transmitting
spongiform encephalopathy agents via human and veterinary medicinal products
(EMEA/410/01, Rev.2 or update); and(ii)
    
    A residual solvent certificate confirming that there is no
potential for specific toxic solvents listed in the USP / ICH residual
solvents Class I, Class II or Class III to be present and the Components, if
tested, will comply with established USP / ICH requirements. If any of the
solvents listed in the USP / ICH residual solvents Class I, Class II or Class
III are used in the manufacture or are generated in the Manufacturing Process,
solvents of concern will be indicated.
 4.3.5
    
    In-Coming Component Release.Prior to its use in the manufacture of any Product all Component(s) will be
inspected, tested and released by Patheon against the Specification approved by
Penwest.
 4.4
    
    Building, Facilities, Utilities and Equipment.
 4.4.1
    
    General.All buildings and facilities used in the manufacturing, packaging, testing and
storage of any Components and/or Product will be of suitable size, construction and
location to facilitate cleaning, and will be maintained in a good state of repair.
Maintenance and cleaning records will be kept in accordance with Patheons SOPs.
 4.4.2
    
    Equipment, Calibration and Preventative Maintenance.All equipment used in the manufacturing, packaging, testing and stage of any
Components and/or Product will be suitable for its intended use and appropriately
located to allow for cleaning and maintenance. Calibration and maintenance records
will be kept according to Patheon SOPs for all critical equipment. Patheon will
calibrate instrumentation and qualify computer systems used in the manufacture and
testing of the Product in accordance with Patheons SOPs.
 Page 10 of 25




---



##### 



4.4.3
    
    Environmental Monitoring Program.Patheon will perform and maintain an environmental monitoring program. The
collected data will be reviewed and interpreted by the responsible person within
Patheons quality unit. Any out of limit results impacting the Product will be
reported immediately to Penwest and managed appropriately in accordance with
Patheon SOPs.
 4.5
    
    Production Controls.
 4.5.1
    
    Master Batch Record.Penwest will provide the Product Specifications to Patheon and Patheon will
manufacture Product in accordance with the Specifications.Patheon is responsible for preparing the Master Batch Records for the Product;
provided however that both Patheon and Penwest are responsible for
reviewing and approving such Master Batch Records prior to the manufacture of the
Product.Patheon will not make changes to the approved Master Batch Records except through
the established Patheon change control system, and all master document revisions
will be approved by Penwests quality unit. Any changes made to approved Master
Batch Records (prior to master revisions) must be reviewed and approved by
Penwests quality unit prior to implementation.
 4.5.2
    
    Reprocessing and Rework.Patheon will not reprocess or rework the Product without the prior written consent
of Penwest.Reprocessing is defined as the introduction of material back into the process and
repeating a step, (e.g., redrying, remilling) using the same equipment and
techniques of the established Manufacturing Process.Rework is defined as the introduction of material to one or more processing steps
that are different from the established Manufacturing Process.
 4.5.3
    
    Personnel Training.Patheon will provide appropriate training for all employees. Each person engaged
in the manufacture, packaging, testing, storage, and shipping of the Product will
have the education, training, and
 Page 11 of 25




---



##### 



experience necessary, consistent with cGMP and safety training requirements. All
training will be documented and available upon request by Penwest.
 4.6
    
    Packaging, Labeling and Printed Components.
 4.6.1
    
    Packaging Documentation.Penwest will provide Patheon with the Specifications for all packaging Components.
Patheon will create internal test methods and specifications in support of the
packaging Components; provided that all QC testing for Components will be
conducted by Patheon using the methods and Specifications provided by Penwest to
Patheon, or otherwise approved by Penwest in writing. Packaging Components used
during the manufacture of Products hereunder shall be released as per USP/NF/EP or
to Penwests specifications, as approved in writing by Penwest.
 4.6.2
    
    Printed Components and Artwork.Penwest will provide artwork and labeling text (drum label) specifications to
Patheon. Patheon will create the labeling proofs which must be reviewed and
approved in writing in advance by Penwest.
 4.6.3
    
    Test Methods.Penwest will provide test methods for packaging Components to Patheon. Where
applicable, Patheon will provide test methods and validation for packaging
Components purchased from vendors on the Patheon approved vendor list only
(Appendix C).
 4.7
    
    Exception Reports (Deviations / Investigations).
 4.7.1
    
    Manufacturing Instruction Deviations.Patheon will document, investigate and resolve deviations from the approved
Manufacturing Process, the Specifications and cGMP in accordance with Patheons
SOPs. Patheon will report all deviation report (DR) type deviations to
Penwests responsible person. Patheon will provide copies of all DRs to Penwest
as part of the executed Batch record.
 4.7.2
    
    Notification of Deviations.Patheon will notify Penwest, via email, within [**] if any deviation occurs during
manufacture of the Product.
 Page 12 of 25




---



##### 



4.8
    
    Release of Product.
 4.8.1
    
    Test Methods and Specifications.Penwest will provide to Patheon the finished Product Specifications and will supply
validated analytical test methods to Patheon for the finished Product. Penwest and
Patheon will perform a method transfer as considered necessary.
 4.8.2
    
    Batch Release for Shipment.Batch review and release for shipment to Penwest will be the responsibility of
Patheons Quality Assurance department who will act in accordance with Patheons
SOPs. Any problem discovered by Patheon likely to cause rejection of the Product
will be communicated to Penwest directly along with any supporting documentation
(i.e., OOS, Non-Conforming Report, etc.) of the problem. The communication should
occur within one (1) Business Day after the discovery of the problem. The Product
will be immediately placed in quarantine until a joint Patheon/Penwest material
review board convenes to determine the final disposition of the Product. For each
lot manufactured, Patheon will send via overnight mail (i.e: Fed Ex) a copy of the
Batch record, certificate of analysis and other certificates in order to perform
the Product Release to the attention of Penwest QA.
 4.8.3
    
    Certificate of Compliance.For each Batch released by Patheon for shipment to Penwest, Patheon will deliver to
Penwest a certificate of compliance that will include a statement that the Batch
has been manufactured in accordance with cGMPs, the Manufacturing Process and the
Specifications.
 4.8.4
    
    Product Release.Product shall not be shipped to Penwest or its designated shipping point unless and
until (i) all applicable Batch records, certificates of analysis and other
certificates have been provided to and reviewed by Penwest, and (ii) Penwests
quality assurance representative has performed product release on such quantities
of Product for shipment, in the case of both (i) and (ii), in accordance with the
procedures set forth in this Quality Agreement. Penwest agrees that it shall
review all Batch records and other certificates within 10 days after receipt of
such documents from Patheon.
 Page 13 of 25




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4.9
    
    Validation.
 4.9.1
    
    Master Validation Plan.Patheon will establish applicable master validation plans and maintain a validation
program for the Product. Penwest will review and approve the master validation
plan, performance qualification and process validation protocols and reports for
the Product.
 4.9.2
    
    Cleaning Validation Program.Penwest will provide to Patheon toxicological information (if applicable) to be
used in the development of a cleaning program. Patheon will maintain an
appropriate cleaning and cleaning validation program.
 4.9.3
    
    Analytical Method and Process Transfer.Penwest must ensure that its analytical methods and manufacturing procedures) are
validated. If the methods and procedures are not validated by Penwest, then
Patheon may assist in validation development with the costs being borne by Penwest.
 4.10
    
    Change Control.
 4.10.1
    
    General.Patheon will notify and obtain approval from Penwest before implementing any
proposed changes to the Process, Components, testing, equipment or the Facility as
it pertains to the Product.Penwest will be responsible for submitting the proper amendments to the Regulatory
Authorities for any changes to the current DMF for the Product.Following validation of a process change, Patheon will deliver a copy of the
related validation report to Penwest and the associated stability data, if
applicable, as it becomes available.
 4.11
    
    Documentation.
 4.11.1
    
    Record Retention.Patheon will maintain all Batch records for a minimum of [**] after the applicable
Product expiration date and supply all these records to Penwest upon request.
 Page 14 of 25




---



##### 



Patheon will maintain records and evidence on the testing of Components,
packaging/labeling and other Components for [**] years after the applicable
Components were last used in the manufacture of the Product.At the end of the above noted retention period, Penwest will be contacted
concerning the future storage or destruction of the documents.
 4.12
    
    Laboratory Controls.
 4.12.1
    
    Specifications and Test Methods.Patheon will test and approve the finished Product in accordance with the approved
Specifications, cGMP, analytical methods, and Patheons SOPs.
 4.12.2
    
    Out of Specifications (OOS) / Out of Trend (OOT).Patheon will notify Penwests quality unit of confirmed out-of-Specification
(OOS) or out-of-trend (OOT) results within one (1) Business
Day. Patheon will generate a DR type deviation as per Patheon SOPs and obtain
approval of the DR from Penwests responsible person within their quality unit.
 4.12.3
    
    Method Transfer of Validated Methods.Penwest will provide Patheon with validated test methods for non-compendial
excipients. Penwest will transfer the validated methods to Patheon using approved
protocols.
 4.13
    
    Stability.
 4.13.1
    
    Sample Storage.Patheon will store stability samples as defined in the current MSA or Technology
Transfer Agreement.
 4.13.2
    
    Stability Studies and Protocol.Stability Studies will be conducted in accordance with the MSA or the Technology
Transfer Agreement, as applicable.
 4.13.3
    
    Stability Failures.Patheon will notify Penwest of any stability failure for Product supplied to
Penwest. If a result indicates that a Product has failed
 Page 15 of 25




---



##### 



Termination of the MSA or the Technology Transfer Agreement
  4.14 Annual Product Review.
 General
  4.15 Storage and Distribution.
 General
  Product Storage and Shipment Changes
  Product Quarantine
  4.16 Product Complaints.
 Complaint Investigation
  Page 16 of 25




---



##### 



4.17 Product Recall.
  4.18 Retention Samples.
 Component Retention Samples
   Finished Product Retention Samples
  Page 17 of 25




---



##### 



SECTION 5: MISCELLANEOUS
 5.1 Additional Product.
 Appendix A
 5.2 Notices.
  5.3 Entire Agreement.
  5.4 Other Terms.
  Page 18 of 25




---



##### 



Penwest Pharmaceuticals Co.By:
    
    /s/ Paula D. Buckley
    
    Date:
    
    June 8, 2010/s/(Paula D. Buckley, Vice President QA/QC)Patheon Inc.By:
    
    /s/ Brian J. Dale
    
    Date:
    
    June 7, 2010(Brian J. Dale, Director Quality Operations)
 Page 19 of 25




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##### 



SECTION 6: APPENDICES
 
    
    Appendix A: Product(s)
    
    Appendix B: Quality Contacts
    
    Appendix C: Patheon Approved Supplier List
    
    Appendix D: Penwest Approved Supplier List
    
    Appendix E: Patheon Approved Contract Laboratories List
 Page 20 of 25




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##### 



APPENDIX A: PRODUCT(S)
 Products(s)
    
    Galenic Form
    
    Dosage (Strength)TIMERx-N
 A-1




---



##### 



APPENDIX B: QUALITY CONTACTS
 Patheon
    
    PenwestResponsibility
    
    Quality Assurance
    
    Quality AssuranceName
    
    [**]
    
    [**]Title
    
    [**]
    
    [**]Phone
    
    [**]
    
    [**]Fax
    
    
    
    [**]E-mail
    
    [**]
    
    [**]Address
    
    [**]
    
    [**]Responsibility
    
    Regulatory Affairs
    
    Regulatory AffairsName
    
    [**]
    
    [**]Title
    
    [**]
    
    [**]Phone
    
    [**]
    
    [**]Fax
    
    
    
    [**]E-mail
    
    [**]
    
    [**]Address
    
    [**]
    
    [**]Responsibility
    
    Product Complaints
    
    AuditsName
    
    [**]
    
    [**]Title
    
    
    
    [**]Phone
    
    
    
    [**]Fax
    
    
    
    [**]E-mail
    
    
    
    [**]Address
    
    
    
    [**]Responsibility
    
    Product Release
    
    Product ReleaseName
    
    [**]
    
    [**]Title
    
    
    
    [**]Phone
    
    
    
    [**]Fax
    
    
    
    [**]E-mail
    
    
    
    [**]Address
    
    
    
    [**]Responsibility
    
    Account Manager
    
    Account ManagerName
    
    [**]
    
    [**]Title
    
    [**]
    
    [**]Phone
    
    [**]
    
    [**]Fax
    
    
    
    [**]E-mail
    
    [**]
    
    [**]Address
    
    [**]
    
    [**]
 B-1




---



##### 



APPENDIX C: PATHEON APPROVED VENDOR LIST
 Raw Material/Component
    
    Supplier[**]
    
    [**]
 C-1




---



##### 



APPENDIX D: PENWEST APPROVED VENDOR LIST
 Raw Material/Component
    
    Supplier[**]
    
    [**][**]
    
    [**][**]
    
    [**][**]
    
    [**][**]
    
    [**][**]
    
    [**][**]
    
    [**]
 D-1




---



##### 



APPENDIX E: PATHEON APPROVED CONTRACT LABORATORIES LIST
 Contract Laboratory
    
    Address
    
    Contact Information[**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**][**]
    
    [**]
    
    [**]
  E-1




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##### 



SCHEDULE F
 TECHNICAL DISPUTE RESOLUTION
  Appointment of Expert
 Conflicts of Interest
 Not Arbitrator Arbitration Act Schedule F
 Procedure
 (a)
    
    Timing. The expert will be so appointed on condition that (i) he or
she promptly fixes a reasonable time and place for receiving representations,
submissions or information from the Parties and that he or she issues the
authorizations to the Parties and any relevant Third Party for the proper conduct of
his or her determination and any hearing and (ii) he or she renders his decision (with
full reasons) within [**] Business Days (or another other date as the Parties and the
expert may agree) after receipt of all information requested by him or her under
Paragraph 4(b) hereof.
 (b)
    
    Disclosure of Evidence. The Parties undertake one to the other to give
to any expert all the evidence and information within their respective possession or
control as the expert may reasonably consider necessary for determining the matter
before him or her, which information such Party will disclose promptly and in any event
within [**] Business Days after a written request from the relevant expert to do so.
 (c)
    
    Advisors. Each Party may appoint any counsel, consultants and advisors
as it feels appropriate to assist the expert in his or her determination and so as to
present their respective cases so that at all times the Parties will co-operate and
seek to narrow and limit the issues to be determined.
 F-1




---



##### 



(d)
    
    Appointment of New Expert. If within the time specified in Paragraph
4(a) above the expert will not have rendered a decision in accordance with his or her
appointment, a new expert may (at the request of either Party) be appointed and the
appointment of the existing expert will thereupon cease for the purposes of determining
the matter at issue between the Parties save this if the existing expert renders his or
her decision with full reasons prior to the appointment of the new expert, then this
first decision will have effect and the proposed appointment of the new expert will be
withdrawn.
 (e)
    
    Final and Binding. The determination of the expert will, except for
fraud or manifest error, be final and binding upon the Parties.
 (f)
    
    Costs. Each Party will [**] for any matter referred to an expert
hereunder and, in the absence of express provision in the Agreement to the contrary,
[**].
 Schedule F
 F-2




---



##### 



SCHEDULE G
 CONFIDENTIALITY AGREEMENT
 [ ]
 G-1




---



##### 



SCHEDULE H
 SHIPPING LOGISTICS PROTOCOL
  Exports of Products from Canada to the United States
 1.
    
    Shipping terms will be [**] (INCOTERMS 2000), the Facility.
 2.
    
    Patheon, as the exporter of record from Canada, will carry out all customs formalities
necessary to export the Products including declaring the value of the Products being exported
from Canada by completing a B-13 Export Declaration form which will be completed showing
Patheon as the exporter of record of the Products with a value equivalent to the Price of the
Products to Penwest.
 3.
    
    Patheon will report exports directly to Canada Revenue Agency and Statistics Canada at the
time of shipment from the Facility.
 H-1




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[CLIENT LETTERHEAD]
 Form of Logistics Routing Guide
 [INSERT ADDRESS]
 
 1.
    
    Routine Routing/Shipping Instructions
 The following lists the recommended agents and procedures for shipments of [PRODUCT NAME]from
Patheons manufacturing site at [INSERT SITE ADDRESS], Ontario, Canada to [INSERT DESTINATION
NAME AND ADDRESS].AGENTS:
 
    
    Freight forwarder  Contact:            PH: ( )
 
    
    Customs broker     Contact:            PH: ( )
 Questions concerning transport logistics should be directed to [CLIENT CONTACT INFO].
 The following documents must be provided to the carrier for transport and customs purposes:
 
    
    Proforma Invoice
 
    
    Bill of Lading (B/L)
 
    
    Applicable Permits/Declarations
 
    
    Packing List
 
    
    If eligible, NAFTA Certificate of Origin will be provided in blanket form yearly to
[INSERT CLIENTS NAME]or [INSERT CLIENTS NAME]broker.
 Upon shipment departure from Patheon, a full set of documents must also be faxed to the
following individuals:
 
    
    [INSERT CLIENT CONTACT FAX OR EMAIL]
 Freight is shipped to:
 [INSERT DESTINATION NAME AND ADDRESS]
 Information to be provided on Proforma Invoice.
 
    
    Net Quantity
 
    
    Patheon Code & Lot Number
 
    
    Penwest Lot Number/ purchase order (PO)Number
 
    
    C$ / Unit Including Assist Value & Toll Manufacturing Charge
 
    
    HTS (Harmonize Tariff Schedule)#
 
    
    NDC/IND/ANDA
 
    
    FDA Product Code
 
    
    Ship Date
 
    
    Patheon Bill of Lading Number




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
    
    Gross Weight
 
    
    Number of Pallets
 Assist Values:
 Information to be provided on Bill of Lading:
 
    
    B/L Number
 
    
    Carrier
 
    
    Origin Point
 
    
    Shipper Information
 
    
    Consignee
 
    
    Consignee Address
 
    
    Ship Date
 
    
    Number of Pallets
 
    
    Gross Weight
 
    
    PO Number for each Product/Lot
 
    
    Description of Goods Indication PC, Lot Number Quantity
 
    
    Seal Number
 
    
    Freight Terms (FCA)
 
    
    Carrier Signature
 Information to be provided on Packing List:
 
    
    Ship date
 
    
    Bill of Lading Number
 
    
    Number of Pallets
 
    
    Weight
 
    
    Product Description
 
    
    Patheon Code Number, if applicable
 
    
    Patheon Lot Number, if applicable
 
    
    Number of Full Cartons (drums if bulk) x Quantity Per Carton
 
    
    Number of Partial Cartons (drums if bulk) x Quantity Per Carton
 
    
    Total Number of Cartons with Total Quantity Shipped
 2.
    
    Non-Routine Routing/Shipping Instructions
 As non-standard shipments are unique, the specific situations are to be discussed and agreed to
by both Patheon and Penwest prior to shipment. Examples of non-standard shipments are shipping
study samples, clinical/development Batches, etc.