Document:

Exhibit
4.40

 

	
   

  	
  WARNER-LAMBERT JULY 1,
  1999 AMENDED & RESTATED

  
	
   

  	
  MANUFACTURE & SUPPLY
  AGREEMENT (DPI)

  
	
   

  	
  FILE 2

  

 

 

Amended and Restated

MANUFACTURE AND SUPPLY AGREEMENT

 

BETWEEN

WARNER-LAMBERT CANADA INC.

AND

DRAXIS PHARMA INC.

 

DATED AS OF JULY 1,
1999

 

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Definitions

  	
   

  
	
  1.1.

  	
  Definitions

  	
   

  
	
  1.2.

  	
  Terms Generally

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Equipment

  	
   

  
	
  2.1.

  	
  Purchase and Installation of Equipment, Molds and
  Tooling

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Supply and Purchase Requirements;
  Orders; Shipment and Delivery Terms; Inventory

  	
   

  
	
  3.1.

  	
  Agreement to Supply

  	
   

  
	
  3.2.

  	
  Use of Facility Equipment, Molds and Tooling;
  Notice

  	
   

  
	
  3.3.

  	
  Orders

  	
   

  
	
  3.4.

  	
  Production Requirements; Required Tolerance

  	
   

  
	
  3.5.

  	
  Forecasts

  	
   

  
	
  3.6.

  	
  Standard Forms

  	
   

  
	
  3.7.

  	
  Quantitative Defects

  	
   

  
	
  3.8.

  	
  Supply of Raw Materials, Ingredients and Packaging
  Materials

  	
   

  
	
  3.9.

  	
  Product Samples

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Price, Payment, Price Adjustments

  	
   

  
	
  4.1.

  	
  Determination of Price/Cost of Materials

  	
   

  
	
  4.2.

  	
  Payment Provisions

  	
   

  
	
  4.3.

  	
  Shipping Instructions; Risk of Loss

  	
   

  
	
  4.4.

  	
  Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Manufacturing Standards, Quality
  Control Inspection, Rejection and Recall of Products

  	
   

  
	
  5.1.

  	
  Manufacturing Standards

  	
   

  
	
  5.2.

  	
  Storage Requirements

  	
   

  
	
  5.3.

  	
  Use of Packaging Materials

  	
   

  
	
  5.4.

  	
  Production Codes

  	
   

  
	
  5.5.

  	
  Maintenance of Facility, Equipment and Molds

  	
   

  
	
  5.6.

  	
  Legal and Regulatory Filings and Requests

  	
   

  
	
  5.7.

  	
  Analysis of Materials

  	
   

  
	
  5.8.

  	
  Non-conforming Materials

  	
   

  
	
  5.9.

  	
  Quality Tests and Checks

  	
   

  
	
  5.10.

  	
  Non-complying Products

  	
   

  
	
  5.11.

  	
  Disposal of Rejected Products and Materials

  	
   

  
	
  5.12.

  	
  Maintenance and Retention of Records and/or
  Samples

  	
   

  
	
  5.13.

  	
  Rejection of Shipments; Disposal of Rejected
  Shipments; Dispute Resolution

  	
   

  
	
  5.14.

  	
  Customer Complaints; Recalls

  	
   

  
	
  5.15.

  	
  Government Inspections, Seizures and Recalls

  	
   

  
	
  5.16.

  	
  Inspections and Audits by Warner

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Representations and Warranties and
  Covenants

  	
   

  
	
  6.1.

  	
  Representations, Warranties and Covenants

  	
   

  
	
  6.2.

  	
  Notice of Material Events

  	
   

  
	
  6.3.

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Ownership; Trademarks; Proprietary
  Information

  	
   

  
	
  7.1.

  	
  Warner’s Ownership of Intellectual and Other
  Property

  	
   

  

 

 

	
  7.2.

  	
  The Manufacturer’s Ownership of Other Property

  	
   

  
	
  7.3.

  	
  Reproduction of and Right to Use Trademarks Etc

  	
   

  
	
  7.4.

  	
  Manufacture of Competing Products

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Indemnification

  	
   

  
	
  8.1.

  	
  The Manufacturer’s Indemnification of Warner

  	
   

  
	
  8.2.

  	
  Warner’s Indemnification of the Manufacturer

  	
   

  
	
  8.3.

  	
  Assertion of Claim

  	
   

  
	
  8.4.

  	
  Survival

  	
   

  
	
  8.5.

  	
  Consequential Damages

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Insurance

  	
   

  
	
  9.1.

  	
  Coverage

  	
   

  
	
  9.2.

  	
  Certificates of Insurance; Maintenance of Coverage

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Confidential
  Information

  	
   

  
	
  10.1.

  	
  Confidential
  Information

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.

  	
  Term,
  Termination

  	
   

  
	
  11.1.

  	
  Initial Term; Term

  	
   

  
	
  11.2.

  	
  Termination

  	
   

  
	
  11.3.

  	
  Effect of Termination

  	
   

  
	
  11.4.

  	
  Unused Materials

  	
   

  
	
  11.5.

  	
  Returns of Materials, etc. Supplied by Warner

  	
   

  
	
  11.6.

  	
  Maintenance of Records

  	
   

  
	
  11.7.

  	
  Harmonization
  Plans; Transition

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Force Majeure

  	
   

  
	
  12.1.

  	
  Force Majeure

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Miscellaneous

  	
   

  
	
  13.1.

  	
  Year 2000 Compliance

  	
   

  
	
  13.2.

  	
  Compliance with Laws

  	
   

  
	
  13.3.

  	
  Relationship of the
  Parties

  	
   

  
	
  13.4.

  	
  Assignment

  	
   

  
	
  13.5.

  	
  Notice

  	
   

  
	
  13.6.

  	
  Entire Agreement

  	
   

  
	
  13.7.

  	
  Incorporation of
  Schedules

  	
   

  
	
  13.8.

  	
  Severability

  	
   

  
	
  13.9.

  	
  Waiver

  	
   

  
	
  13.10.

  	
  Headings

  	
   

  
	
  13.11.

  	
  Counterparts

  	
   

  
	
  13.12.

  	
  Governing Law

  	
   

  
	
  13.13.

  	
  Language

  	
   

  
	
  13.14.

  	
  Paramountcy

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule A

  	
   

  
	
  Schedule B

  	
   

  
	
  Schedule C

  	
   

  
	
  Schedule D

  	
   

  
	
  Schedule E

  	
   

  
	
  Schedule F

  	
   

  

 

ii

 

Amended and Restated

MANUFACTURE AND SUPPLY AGREEMENT

 

MANUFACTURE AND SUPPLY AGREEMENT dated as of July 1, 1999, by and
between WARNER-LAMBERT CANADA INC. (“Warner”), a corporation duly organized and
incorporated under the laws of the province of Ontario having its principal
office located at 2200 Eglinton Avenue East, Scarborough, Ontario, Canada, M1L
2N3, and DRAXIS PHARMA INC. (the “Manufacturer”), a corporation
incorporated under the laws of Canada, and having its principal office located
at 16751 Trans Canada Highway, Kirkland, Quebec, H9H 4J4.

 

WITNESSETH:

 

WHEREAS, Warner desires to have the Manufacturer manufacture and supply
Warner with its requirements of Warner’s products listed in Schedule A
attached hereto;

 

WHEREAS, the Manufacturer desires to manufacture and supply Warner with
its requirements of such products; and

 

WHEREAS, the parties are willing to carry out the foregoing pursuant to
the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of these premises and the covenants,
agreements and stipulations hereinafter set forth, the parties hereto agree as
follows:

 

Section 1.                                         Definitions.

 

1.1.                                                                            Definitions.

 

The following terms (except as otherwise expressly provided) for all
purposes of this Agreement shall have the following respective meanings:

 

“Action or Proceeding” shall mean any action, claim, suit,
proceeding, arbitration or Governmental or Regulatory Authority action,
notification, investigation or audit.

 

“Affiliate” shall mean any Person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control with the
Person specified. For purposes of this definition, control of a Person means
the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

 

“Agreement” shall mean this Manufacturing and Supply Agreement and all Schedules
attached hereto, as the same may be amended, supplemented or otherwise modified
from time to time pursuant to the terms set forth herein.

 

 

Warner-Lambert/Draxis Pharma

Manufacture and Supply Agreement

 

“Annual Product Review” shall have the meaning set forth in Section II(1)
of Schedule D.

 

“Business Day” means a day other than a Saturday or Sunday
or a statutory holiday in the Province of Quebec.

 

“Consumer Price Index” or “CPI” means
the consumer price index established and published, from time to time, by
Statistics Canada for the relevant period or periods and described as “All
Items – Canada”, or any successor index or organization.

 

“Environmental Laws” shall mean all federal, provincial, foreign,
local, city or municipal laws, statutes, by-laws and regulations and, to the
extent they have the force of law, all rules, orders, codes, protocols,
guidelines, policies, directions, actions, judicial or administrative decrees
promulgated pursuant to such laws, statutes and regulations relating to or
controlling, in whole or in part and in any manner whatever, the environment,
employee and public health and safety and the assets and undertaking of the
Manufacturer and the intended uses thereof and includes, without limitation,
Environmental Laws relating to the storage, generation, use, handling,
manufacture, processing, labelling, transportation, treatment, release or
disposal of Hazardous Materials.

 

“Environmental Losses” shall mean any and all fines, penalties,
costs, liabilities, damages, losses or expenses (including sampling, monitoring
or remediation costs, liabilities based on a finding of successor liability,
reasonable attorneys’, consultants’ or engineering fees and disbursements,
costs of defense and interest expense) incurred by Warner or for which Warner
or an Affiliate of Warner is liable or obligated pursuant to any Environmental
Law and (i) arising out of the operation, ownership or control of the Facility,
or (ii) relating to, arising from, or in any way connected with the
manufacturing, generation, processing, storage, transportation, distribution,
treatment, disposal or other handling of products (including the Products),
associated by-products, raw materials, intermediates, wastes, Hazardous
Materials, emissions, releases, spills, leaks or discharges or returned
products (including the Products), by the Manufacturer or its permitted
assignees.

 

“Facility” shall mean the Manufacturer’s manufacturing facility located at 16751
Trans Canada Highway, Kirkland, Quebec, H9H 4J4, and, subject to Warner’s prior
written approval, such other facilities used by the Manufacturer in the
manufacture and storage of Products or Materials utilized in the manufacture of
Products hereunder.

 

“Formulate” shall mean to effect the operation required in the manufacture,
processing, testing, packaging, labelling or storage, as the case may be, of
the Products by the Manufacturer.

 

“Formulation” shall mean any operation required in the
manufacture, processing, testing, packaging, labelling or storage, as the case
may be, of the Products by the Manufacturer.

 

2

 

“Good Manufacturing Practices” or “GMP” shall
mean those good manufacturing practices as shall be required by applicable Laws
in Canada.

 

“Governmental or Regulatory Authority” shall mean any court, tribunal, arbitrator,
agency, commission, official or other instrumentality of Canada, any foreign
country or any territory, or any domestic or foreign state, province, county,
city or other political subdivision thereof.

 

“Group I Products” shall mean the product(s) listed as Group I
Products in Schedule A attached hereto, as such Schedule may be
amended from time to time by mutual agreement of the parties

 

“Group II Products” shall mean the product(s) listed as Group II
Products in Schedule A attached hereto, as such Schedule may be
amended from time to time by mutual agreement of the parties

 

“Hazardous Materials” shall mean any pollutant, contaminant,
hazardous or toxic substance, constituent or material, other wastes or
substances regulated under any Environmental Law.

 

“Initial Term” shall have the meaning ascribed thereto in Section 11.1.

 

“Laws” shall mean any law, statute, rule, regulation, guideline (including
current GMP), ordinance or other pronouncements of any Governmental or
Regulatory Authority having the effect of law in Canada, any foreign country or
any territory, or any domestic or foreign state, province, county, city or
other political subdivision, including without limitation any Requirements of
Environmental Law.

 

“Losses” shall mean any and all damages, fines, fees, settlements, payments,
obligations, penalties, deficiencies, losses, costs and expenses (including,
without limitation, Environmental Losses, interest, court costs, reasonable
fees of attorneys, accountants and other experts and other reasonable expenses
of litigation or other proceedings or of any claim, default or assessment).

 

“Materials” shall mean all raw materials, ingredients, packaging materials and any
other materials used in the manufacture and packaging of Products by the
Manufacturer.

 

“Person” shall mean any natural person, entity, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union, association or Governmental or Regulatory Authority.

 

“Price” shall mean the price per unit to be charged by the Manufacturer for
Products manufactured and supplied hereunder, as set forth in Schedule C
attached hereto.

 

“Product(s)”
shall mean collectively the Group I Products and the Group II Products as
listed in Schedule A attached hereto, as such Schedule may be amended
from time to time by mutual agreement of the parties.

 

3

 

“Quality Agreement” shall mean the quality agreement entered into
between Warner and the Manufacturer as of the date hereof, which details the
quality obligations and responsibilities of the parties with respect to the
Products and attached hereto as Schedule D.

 

“Recall” shall mean with respect to any and all Products, any “recall”, “product
withdrawal” or “stock recovery” withdrawal, as those terms are defined in the
Product Recall Procedures issued by the Health Protection Branch of Health
Canada, as the same may be amended from time to time, and all as the same may
be amended from time to time (collectively, the “Recall Procedures”), and shall
include any post-sale warning or mailing of information regarding such Product,
including those warnings or mailings described in the Recall Procedures.

 

“Requirements of Environmental Law” shall mean all requirements of Environmental
Law including but not limited to, all such requirements relating to: (i) the
protection, preservation or remediation of the natural environment (the air,
land, surface water or groundwater); (ii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation; and (iii)
hazardous substances or conditions (matters that are prohibited, controlled or
otherwise regulated, such as contaminants, pollutants, toxic substances,
dangerous goods, wastes, hazardous wastes, liquid industrial wastes, hazardous
materials, urea formaldehyde foam type of insulation, asbestos or asbestos
containing materials, polychlorinated biphenyls (PCBs) or PCB contaminated
fluids or equipment, explosives, radioactive substances, petroleum and
associated products, underground storage tanks or surface impoundments and any
emissions, spills, leaks, discharges, releases and threatened releases thereof
or therefrom).

 

“Specifications” shall mean the specifications required by
Warner for the manufacture, processing, packaging and supply of the Products,
including all formulae, raw materials and packing materials requirements, and
standards of quality control, quality assurance and sanitation, all as mutually
agreed upon by the parties in writing and attached hereto as Schedule F
and pursuant to the drug manufacturing procedures, as such Specifications may
be amended, supplemented or otherwise modified from time to time by mutual
agreement of the parties.

 

“Term” shall
have the meaning ascribed thereto in Section 11.1.

 

“Year 2000 Compliance” shall mean: (i) the accurate processing of
date/time data (including, but not limited to, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first centuries and
during the years 1999 and 2000, including leap year calculations (2000 being a
leap year), and (ii) the accurate and uninterrupted functioning of hardware,
software and other systems and equipment before, during and after January 1,
2000, without any change in operations associated with the advent of 1999 or
the twenty-first century.

 

4

 

1.2.                                                                            Terms Generally.

 

The definitions in Section 1 shall apply equally to both the
singular and plural forms of the terms defined. The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”. All references herein to Sections, paragraphs, clauses and
Schedules shall be deemed references to Sections, paragraphs and clauses of
this Agreement and Schedules to this Agreement unless the context shall
otherwise require.

 

Section 2.                                          Equipment

 

2.1.                                                                            Purchase
and Installation of Equipment, Molds and Tooling.

 

The Manufacturer shall be responsible for purchasing, installing and
validating at its Facility all new equipment, molds, tooling, and/or
modifications to existing equipment, molds and/or tooling necessary for the
manufacture, packaging, labelling and shipment of Products hereunder, and all
costs and expenses associated therewith. Notwithstanding the foregoing, Warner
shall be responsible for all costs and expenses associated with the purchase,
installation and validation at the Facility of all new equipment, molds,
tooling and/or modifications to existing equipment, molds and/or tooling which
are required, after the date hereof, as a result of any change made in the manufacturing
or packaging of the Products, provided that such change was made at Warner’s
request and not for the purpose of complying with the Specifications or GMP.
The installation of the foregoing equipment, molds and tooling shall be
conducted in accordance with all applicable Laws and the Specifications (as
relevant). At the request of Warner, the Manufacturer shall return to Warner
all equipment, molds, tooling and operating supplies relating to any Product
that were provided or paid for by Warner.

 

Section 3.                                          Supply and Purchase
Requirements; Orders; Shipment and Delivery Terms; Inventory.

 

3.1.                                                                            Agreement to Supply.

 

(a)                                  During the Term of this Agreement, and
subject to the provisions of this Agreement, the Manufacturer shall
manufacture, package and exclusively supply to Warner (and/or its Affiliates or
designees) the Products in accordance with the Specifications and this
Agreement.

 

(b)                                 The manufacturing by the Manufacturer with
respect to Group I Products commenced on or about April 1, 1999 in accordance
with the Manufacture and Supply Agreement dated as of February 1, 1999
between the parties. The manufacturing by the Manufacturer with respect to
Group II Products shall commence on or about October 1, 1999, provided
that such manufacturing shall not commence, with respect to certain of the
Group II Products, until such later date as Warner notifies the Manufacturer.
Provided Warner notifies the Manufacturer not less than ninety (90) days in
advance of the proposed manufacturing commencement date for any Group II
Product, the Manufacturer shall conduct such validation it considers necessary,
and in accordance with this Agreement, to ensure that the commencement of
manufacturing of Group II Products will occur as required by Warner.

 

5

 

3.2.                                                                            Use of Facility Equipment,
Molds and Tooling; Notice.

 

(a)                                  All manufacturing, packaging and storage
activities shall be carried out by the Manufacturer at the Facility and
utilizing equipment, molds and tooling in the manner set forth in the
Specifications, except to the extent that the Manufacturer receives Warner’s
advance written permission to alter the location or specified usage of the
foregoing.

 

(b)                                 Following receipt of Warner’s advance written
permission, as contemplated in paragraph (a) of this Section 3.2, the
Manufacturer shall notify Warner in writing prior to making any change to (i)
the location of any manufacturing, packaging or storage activities carried out
hereunder, or (ii) the equipment used in the manufacture or packaging of the
Products hereunder.

 

3.3.                                                                            Orders.

 

***

 

3.4.                                                                            Production Requirements;
Required Tolerance.

 

The Manufacturer shall Formulate and deliver to Warner the Products and
devote the necessary capacity to meet Warner’s firm purchase commitments and
weekly requirements for the Products in a timely fashion. Throughout the Term
of this Agreement, the Manufacturer shall: (i) Formulate and deliver 98% of
orders on the delivery date specified within each purchase order, or within 3
Business Days thereof; and (ii) deliver 95% of the quantity ordered by Warner
pursuant to each purchase order.

 

3.5.                                                                            Forecasts.

 

***

 

3.6.                                                                            Standard Forms.

 

In ordering and delivering the Products pursuant hereto, Warner and the
Manufacturer may employ their standard forms, but nothing in those forms shall
be construed to modify, amend or supplement the terms of this Agreement and, in
the case of any conflict herewith, the terms of this Agreement shall control.

 

3.7.                                                                            Quantitative Defects.

 

Warner shall inform the Manufacturer in writing of any claim relating
to quantitative defects in shipments of Products within thirty (30) days
following actual receipt of such shipments by Warner and Warner shall provide
to the Manufacturer copies of any appropriate documents relating to such
defects. The Manufacturer shall, at its own expense, provide Warner with any
missing quantities of such Products as soon as reasonably possible

 

6

 

after
receipt of notice from Warner. Warner shall only be obligated to pay for actual
quantities of Products received by Warner. Any claim for a quantitative defect
which is not made within such thirty (30) day period shall be deemed to have
been waived by Warner.

 

3.8.                                                                            Supply of Raw Materials,
Ingredients and Packaging Materials.

 

(a)                                  The Manufacturer shall procure all Materials
relating hereto. All Materials shall comply with the Specifications. The
Manufacturer may not substitute or otherwise replace any Material and/or any
supplier thereof without the prior written consent of Warner. The costs of such
Materials including the cost of procuring such Materials (e.g. freight) are
included in the Price of the Products.

 

(b)                                 Warner shall supply to the Manufacturer all
labelling, artwork, text and copy to be used by the Manufacturer in Product
packaging and labelling.

 

3.9.                                                                            Product Samples.

 

The Manufacturer shall provide Warner or any such other Person as
Warner shall designate with representative lot samples of each production batch
of Product promptly upon request. Such Product samples shall be shipped to
Warner or such other Person at Warner’s expense in accordance with the
provisions set forth in Schedule B hereof, or as otherwise instructed by
Warner. Warner shall pay for such samples when invoiced in accordance with Section 4.2 hereof.
Any disputes as to whether any such Product samples conform to the
Specifications shall be resolved in accordance with the provisions of Section 5.13
hereof.

 

Section 4.                                          Price,
Payment, Price Adjustments.

 

4.1.                                                                            Determination
of Price/Cost of Materials.

 

***

 

4.2.                                                                            Payment
Provisions.

 

***

 

 

7

 

4.3.                                                                            Shipping Instructions; Risk
of Loss.

 

***

 

4.4.                                                                            Taxes.

 

***

 

Section 5.                                          Manufacturing Standards,
Quality Control Inspection, Rejection and Recall of Products.

 

5.1.                                                                            Manufacturing Standards.

 

(a)                                  The Manufacturer shall manufacture, process
and package the Products (including without limitation disposing of all waste
and other materials) strictly in accordance with the Specifications, applicable
Laws including current GMP.

 

(b)                                 If, at any time during the Term, there occurs
a material change in current GMP, including a change which requires the
revalidation of the manufacturing process, or a significant portion of the
process, the parties will negotiate in good faith to settle the proportion of
the cost of implementing such material change to be borne by each of the
parties.

 

5.2.                                                                            Storage Requirements.

 

The Manufacturer shall store all Materials and finished Products in a
clean, dry area, free from insects and rodents, in a manner to prevent entry of
foreign materials. Storage and handling of the foregoing shall be strictly in
accordance with the provisions of all applicable Laws including current GMP and
the quality control programs and standards set forth in the Specifications.

 

8

 

5.3.                                                                            Use of Packaging Materials.

 

Packaging materials supplied by Warner and/or
used in the packaging and supply of the Products hereunder may only be used by
the Manufacturer in connection with its packaging and supply of the Products
hereunder and for purposes consistent with the terms of this Agreement and for
no other purpose (e.g., such packaging materials shall not be used for storage
or waste disposal purposes).

 

5.4.                                                                            Production
Codes.

 

The Manufacturer agrees that production codes
placed on the Products shall be in accordance with the Specifications.

 

5.5.                                                                            Maintenance of Facility, Equipment and Molds.

 

The Manufacturer shall maintain all
equipment, tooling and molds utilized in the manufacture and supply of Products
hereunder in good operating condition and shall maintain such equipment,
tooling and molds in accordance with, or in a manner that shall meet the
requirements of (i) all applicable Laws, including current GMP and (ii) all
requirements set forth in the Specifications. The Manufacturer shall maintain
the Facility in accordance with, or in a manner that shall meet the
requirements of all material Laws including current GMP and all requirements
set forth in the Specifications. In the event that the Manufacturer fails or
anticipates to fail to meet any of the foregoing requirements relating to the
Manufacturer’s maintenance of the Facility or any equipment, tooling or molds
utilized in connection herewith, or in the event that the Manufacturer receives
any notice from any Governmental or Regulatory Authority relating to its
maintenance of, or failure to maintain, the Facility or any equipment, tooling
or molds utilized in connection herewith, the Manufacturer shall promptly
contact Warner, and the Manufacturer shall take any actions as may be required
under the Specifications.

 

5.6.                                                                            Legal
and Regulatory Filings and Requests.

 

The Manufacturer and Warner shall cooperate
and be diligent in responding to all requests for information from, and in
making all legally required filings with, Governmental and Regulatory
Authorities having jurisdiction to make such requests or require such filings.
The Manufacturer shall obtain and comply with all material licenses, consents,
permits and Laws which may from time to time be required by appropriate
Governmental and Regulatory Authorities with respect to its manufacturing
processes and the Facility and otherwise to permit the performance of its
obligations hereunder.

 

5.7.                                                                            Analysis
of Materials.

 

Prior to use in production, the Manufacturer
shall have shipments of Materials analyzed for such matters in accordance with
the Specifications and the Manufacturer shall ensure that all Materials
strictly comply with the Specifications. Such analyses may be conducted, at the
option of Warner, by the Manufacturer internally or by an outside laboratory
retained by the Manufacturer and approved by Warner. For purposes of this
Agreement, such tests shall be considered routine and shall be performed at the
Manufacturer’s expense. All test

 

9

 

results
are to be carefully documented and available for inspection or statistical
summary at Warner’s request.

 

5.8.                                                                            Non-conforming Materials.

 

The Manufacturer shall not use any Materials that do not strictly
comply with the Specifications (without the prior written approval of Warner)
and applicable Laws. If the Manufacturer uses any non-conforming Material
without receiving the prior written approval of Warner, the Manufacturer shall
be responsible for all Losses suffered or incurred by Warner as a result of
such use, including, without limitation, any expenses incurred by the
Manufacturer or Warner in the correction thereof and any expenses incurred by
Warner arising out of any Recall of any affected Product or other corrective
measures taken with respect thereto. The Manufacturer shall be responsible for
pursuing all resolutions with the applicable supplier of non-conforming
Materials.

 

5.9.                                                                            Quality Tests and Checks.

 

The Manufacturer shall perform all stability, validation, raw material
and in-process and finished product tests or checks required by the
Specifications and applicable Laws in order to ensure the quality of the
Products manufactured and supplied hereunder. For purposes of this Agreement,
such tests and/or checks shall be considered routine and shall be performed at
the Manufacturer’s expense. All tests and test results shall be carefully
performed, documented and summarized by the Manufacturer in accordance with the
Specifications and applicable Laws. To the extent necessary in relation to the
release of any Product by Warner, the Manufacturer shall supply to Warner a
certificate of analysis with respect to each production batch of Product
tested.

 

5.10.                                                                     Non-complying
Products.

 

No Product shall be released for shipment by the Manufacturer unless
such Product strictly complies with the Specifications, the provisions of Schedule D
of this Agreement and all applicable Laws. The Manufacturer shall quarantine
any non-complying Products and shall advise Warner of such non-compliance and
of the testing or inspection results of such batch or batches of Product.
Products that do not strictly comply and are quarantined should be properly
tagged and isolated and may be released only with the prior written approval of
Warner.

 

5.11.                                                                     Disposal of Rejected
Products and Materials.

 

All Products rejected pursuant to Section 5.13 and Materials
rejected pursuant to Section 5.8 shall be removed (if applicable) and
disposed of by either Warner or the Manufacturer in a manner consistent with
applicable Laws and as approved in advance by Warner, acting reasonably, (such
disposal cost to be at the expense of the party responsible therefor pursuant
to the terms of Section 5.8 or 5.13, as the case may be). No rejected
Materials, Product or Product in process shall be sold as salvage or for any
other purpose by the Manufacturer or designees or agents of the Manufacturer
without the prior written approval of Warner. The Manufacturer shall replace
such rejected Products or Materials at the expense of the party responsible
therefor, in accordance with the provisions of Section 5.8 or 5.13 hereof.

 

10

 

5.12.                                                                     Maintenance and Retention of
Records and/or Samples.

 

(a)                                  The Manufacturer shall maintain detailed
records with respect to raw and packaging material usage and finished Product
production, which records shall include production code dates and shipping
information relating to the Products, so that Products can be easily traced in
case of a Recall or rejection of Products or Materials. The Manufacturer’s
records shall be sufficient such that the Manufacturer shall be capable of
responding to inquiries by Warner within 2 days Business Days of notification,
including providing the production code date and the location of the Products
in question. Warner shall be responsible for responding to all customers’
inquiries and/or complaints relating to the Products and the recordkeeping relating
thereto.

 

(b)                                 The Manufacturer shall retain, for periods
required by applicable Law, and upon request by Warner make available to
Warner, (i) copies of the batch manufacturing records, stability study and
quality control records maintained pursuant hereto or otherwise maintained in
relation to the Products, (ii) copies of testing results of all the tests
performed pursuant hereto or otherwise performed in relation to the Products,
(iii) samples of the Materials, and (iv) samples of each batch of Products to
the extent reasonably instructed by Warner or required by applicable Laws. The
Manufacturer shall send reasonable quantities of samples of each batch of
Products for analysis to Warner’s laboratory or a third party laboratory
designated by Warner when reasonably requested to do so by Warner. The expense
of such routine testing shall be paid by Warner. Any disputes as to whether any
such Product samples fail to conform to the Specifications shall be resolved in
accordance with the provisions of Section 5.13 hereof.

 

5.13.                                                                     Rejection of Shipments;
Disposal of Rejected Shipments; Dispute Resolution.

 

(a)           Within thirty (30)
days following receipt by Warner of any given shipment of Products hereunder,
Warner shall have the right to give the Manufacturer notice of rejection (“Rejection
Notice”) in respect of any shipment of Products that fails in whole or in
part to meet the Specifications (“Rejected Products”); provided,
however, that there shall be no time restrictions applicable to Warner’s
provision of a Rejection Notice where any of the following have occurred or are
present:

 

(i)                                     latent defects in the shipped Products that
have not been caused by components or ingredients supplied by Warner (assuming
proper storage and handling by the Manufacturer of such components or
ingredients supplied by Warner and compliance by the Manufacturer with the
terms hereof),

 

(ii)                                 defects in the shipped Products that are not
readily apparent on visual inspection, or

 

(iii)                              breach by the Manufacturer of any of its representations warranties or
obligations hereunder.

 

11

 

Except
in the instances set forth in clauses (i), (ii) and (iii) of this paragraph
(a), failure on the part of Warner to give a Rejection Notice shall mean acceptance
by it of the shipment to which the Rejection Notice would have otherwise
applied.

 

(b)                                 The Manufacturer shall have thirty (30) days
from receipt of a Rejection Notice within which to accept or reject Warner’s
claims. The Manufacturer will promptly, following receipt of the Rejection
Notice, submit a report on all Rejected Products, including the investigation
and testing done and the recommended disposition to Warner. Warner shall review
such report and notify the Manufacturer that Warner either requests additional
data, approves the recommended disposition of the Rejected Products or will
otherwise direct the Manufacturer as to how the Rejected Products should be
disposed. All such Rejected Products shall be disposed of at the Manufacturer’s
expense.

 

(c)                                  If Warner and the Manufacturer agree that all
or part of the Rejected Products may be reworked or reclaimed, Warner shall
return such Products to the Manufacturer forthwith, and the Manufacturer shall
reimburse Warner for all reasonable expenses associated with such return.

 

(d)                                 In the event of a dispute between Warner and
the Manufacturer as to whether a shipment of Products fails in whole or part to
meet the Specifications, the resolution of such dispute shall proceed as
follows:

 

(i)                                     firstly, analysts from each of Warner and the
Manufacturer shall meet to determine that the methods of analysis are the same
and that such analysis was executed in the same manner by each party;

 

(ii)                                  secondly, controlled, split samples of the
disputed Product shall be sent from one party to the other for analysis in the
manner agreed to in (d)(i);

 

(iii)                               thirdly, if the analysis in (d)(ii) does not resolve the dispute,
analysts from each party shall meet and mutually proceed with the analysis of a
mutually agreed sample;

 

(iv)                              fourthly, if there is still no resolution of the dispute, the parties
shall retain an independent testing organization mutually chosen by the
parties, the appointment of which shall not be unreasonably delayed by either
party. The determination of such independent testing organization shall be
binding on both parties.

 

Until
a dispute is resolved, Warner shall properly tag and isolate all Rejected
Products and shall not dispose of any Rejected Products without prior
authorization from the Manufacturer. In any event, whatever the results of the
analysis and the resolution of the dispute, Warner retains the right to
determine the disputed Product’s release status. The fees and costs of the
testing organization, and storage, handling and, if applicable, replacement and
disposal of the Products shall be borne by the party whose position is not
sustained by the testing organization.

 

(e)                                  Warner shall have the right to withhold
payment for any shipment of Rejected Products. If it is ultimately determined
that the Rejected Products were properly

 

12

 

rejected
by Warner, Warner shall have no obligation to pay for the Rejected Products and
the Manufacturer shall promptly reimburse Warner for any payment made in
respect of the Rejected Products prior to receipt by the Manufacturer of the
Rejection Notice and for all other costs incurred. If it is ultimately
determined that the Rejected Products were not properly rejected by Warner,
Warner shall be obligated to pay the outstanding balance owing in respect of
the Rejected Products within 30 days of receipt of the determination made by
the independent testing organization pursuant to paragraph (d) above.

 

(f)                                    If at the time of delivery of a Rejection
Notice Warner requires a replacement shipment of Rejected Products “Replacement
Products”), Warner shall provide a written request for such Replacement
Products along with the Rejection Notice. The Manufacturer shall use
commercially reasonable best efforts to deliver the Replacement Products within
90 days of the date of receipt of the Rejection Notice. Warner shall be
obligated to pay for such Replacement Products in accordance with Section 4.2
of the Agreement.

 

(g)                                 The provisions of this Section 5.13
shall survive termination of this Agreement with respect to shipments of
Products (or any portions thereof) manufactured by the Manufacturer that are
received by Warner subsequent to the termination or expiration of this
Agreement; provided, that subsequent to the termination or expiration of
this Agreement, Warner, in lieu of having the Manufacturer replace such
rejected Products, may elect in its sole discretion to have the Manufacturer
reimburse Warner for the reasonable costs associated with the replacement of
such rejected Products (including any applicable freight charges) by Warner or
a third party selected by Warner.

 

5.14.                                                                     Customer
Complaints; Recalls.

 

(a)                                  The Manufacturer shall provide all reasonable
assistance requested by Warner in investigating customer complaints regarding
any Product that, in Warner’s reasonable opinion, are related to or arise from
the manufacturing and/or packaging of such Product, including, without
limitation, testing of the Product in accordance with Warner’s Specifications.

 

(b)                                 Warner shall be responsible for all Recalls
of Products. Upon the reasonable request of Warner, the Manufacturer shall
assist Warner, to the extent reasonably necessary or relevant, in implementing
Recalls of Products from the market. Upon the receipt by either party of any
direction to Recall any Product from the market from any Governmental or
Regulatory Authority, the receiving party shall notify the other party in
accordance with the terms of Section 5.15 hereof. Warner shall be
responsible for all costs of the Recall unless such Recall results from the
negligence, wilful misconduct or breach of this Agreement by the Manufacturer.

 

5.15.                                                                     Government
Inspections, Seizures and Recalls.

 

If any Governmental or Regulatory Authority conducts an inspection at
the Facility, seizes any Product and/or its Materials, requests a Recall of any
Product, or otherwise notifies the Manufacturer of any violation or potential
violation of any applicable Law relating to a Product or Products, or the
manufacture or storage thereof, Warner shall be notified immediately by the
Manufacturer and the Manufacturer shall take such actions as may be required
under the Specifications or reasonably instructed by Warner. The Manufacturer
shall

 

13

 

promptly
send any reports relating to such inspection, seizure, request or notification
to Warner. In the event that any such Governmental or Regulatory Authority
requests, but does not seize, the Product in connection with any such
inspection, the Manufacturer (i) shall promptly notify Warner of such request,
(ii) shall follow any reasonable procedures instructed by Warner in responding
to such request, provided that such procedures do not interfere with the
Manufacturer’s compliance with the Governmental or Regulatory Authority’s
request, and (iii) shall promptly send any samples of the Product requested by
the Authority to Warner.

 

5.16.                                                                     Inspections
and Audits by Warner.

 

Representatives of Warner shall have access to every Facility for the
purpose of (i) conducting inspections of such Facility and the Manufacturer’s
maintenance and usage of the equipment and the molds and tooling utilized in
the manufacture or packaging of Products, (ii) performing quality control
audits or (iii) witnessing manufacturing, processing, packaging, storage or
transportation of the Products or Materials, all as relating to the manufacture
and supply of Products pursuant to this Agreement (collectively referred to as
inspections). Such inspections do not relieve the Manufacturer of any of its
obligations under this Agreement or create new obligations on the part of
Warner. Such visits by Warner’s representatives shall be conducted at mutually
agreed times during normal business hours with reasonable prior written notice.
Warner shall have access to the results of any tests performed by the
Manufacturer or at the Manufacturer’s direction relating to Products or
Materials or the processes used in the manufacturing or packaging of the
Products. The Manufacturer shall, upon not less than 10 Business Days notice,
make available to an independent chartered accountant, selected by Warner and
reasonably acceptable to the Manufacturer, all books, records and other data
reasonably necessary to evaluate any adjustment made in connection with Price
adjustments. Warner may exercise this right to an audit not more than once in
any calendar year, and then only with respect to adjustments made during the
preceding two calendar years. The independent chartered accountant selected
shall agree not to disclose any confidential information and shall only
disclose to Warner such information as is necessary to determine whether such
adjustments were accurate. Such accountant shall also agree to disclose to the
Manufacturer the results of the review.

 

Section 6.                                         Representations
and Warranties and Covenants. 

 

6.1.                                                                            Representations,
Warranties and Covenants.

 

(a)                                  The Manufacturer hereby represents, warrants
and covenants to Warner that:

 

(i)                                     The Facility, all equipment, tooling and
molds utilized in the manufacture and supply of Products hereunder, and the
procedures and processes (including installation, operation and performance
qualifications) instituted by the Manufacturer in connection herewith are, as
of the date hereof, and shall continue during the Term of this Agreement to be
in material compliance with all applicable Laws and maintained in good
operating condition.

 

(ii)                                  The manufacturing, packaging and storage
operations utilized in and with respect to the production of Products
hereunder; the installation,

 

14

 

operation and maintenance (and repair or replacement, if any) of the
Facility and the equipment, tooling and molds utilized in connection herewith;
and the procedures and processes (including installation, operation and
performance qualifications and disposal of all waste) carried out by the
Manufacturer hereunder, have been conducted and carried out, as of the date
hereof, and shall continue during the Term of this Agreement to be conducted
and carried out, in material compliance with all applicable Laws, including
current GMP and health and safety Laws.

 

(iii)                               The Manufacturer holds, as of the date hereof, and shall continue
during the Term of this Agreement to hold all material licenses, permits and
similar authorizations of Governmental and Regulatory Authorities necessary or
required for the Manufacturer to conduct its operations and business in the
manner currently conducted and as otherwise contemplated herein.

 

(iv)                              The Products furnished by the Manufacturer to Warner under this
Agreement:

 

(1)                                  shall be of the quality specified in, and
shall conform with, the Specifications, and all applicable Laws, including, but
not limited to, requirements of all applicable Government and Regulatory Authorities
and current GMP;

 

(2)                                  shall be manufactured, processed, packaged,
stored and delivered in conformity with the Specifications and all applicable
Laws, including, but not limited to, requirements of all applicable Government
and Regulatory Authorities and current GMP;

 

(3)                                  shall not contain any material that would
cause the Products to be adulterated within the meaning of the Food and Drug
Act (Canada), as amended, or which material has not been used, handled or
stored in accordance with the Specifications, the provisions of Schedule D
of this Agreement, and all applicable Laws, including, but not limited to,
requirements of all applicable Governmental and Regulatory Authorities and
current GMP; and

 

(4)                                  shall be free from material defects in
materials and workmanship not otherwise caused by components or ingredients
supplied by Warner (assuming proper handling and storage by the Manufacturer of
such components or ingredients supplied by Warner and compliance by the
Manufacturer with the terms hereof).

 

Except
as set forth above, the Manufacturer makes no representation or warranty,
express or implied, with respect to the Products, whether as to
merchantability, fitness for a particular purpose or otherwise. Notwithstanding
any provisions of this Agreement, neither the Manufacturer nor any of its
affiliates, employees, agents, directors, officers, assigns or subcontractors
shall have any liability for special, incidental, consequential, punitive or

 

15

 

exemplary damages (other than actual damages resulting from the breach
by the Manufacturer of the foregoing representations, warranties and covenants)
or for economic loss.

 

(b)                                 Warner hereby represents, warrants and
covenants to the Manufacturer that:

 

(i)                                     it shall obtain and maintain all necessary
permits, registrations and licenses required for it to perform its obligations
to the Manufacturer under this Agreement and shall comply with all applicable
Laws.

 

(ii)                                  to the extent that Warner provides any
Materials with respect to any of the Products, all such Materials will comply
with the Specifications and all applicable Laws.

 

(iii)                               it shall provide all information necessary for the Manufacturer to
manufacture the Products in accordance with the Specifications and all
applicable Laws.

 

6.2.                                                                            Notice of Material Events.

 

The Manufacturer hereby agrees to promptly notify Warner of any actual
or anticipated events that have or may be reasonably expected to have a
material adverse effect on any Product or on the Manufacturer’s ability to
manufacture the Products in accordance with the provisions set forth herein,
including, but not limited to, any labour difficulties, strikes, shortages in
materials, plant closings, interruptions in activity and the like.

 

6.3.                                                                            Survival.

 

The representations, warranties and obligations of the Manufacturer and
Warner under this Section 6 shall survive any termination of this
Agreement.

 

Section 7.                                          Ownership;
Trademarks; Proprietary Information.

 

7.1.                                                                            Warner’s
Ownership of Intellectual and Other Property.

 

(a)                                  It is agreed that Warner is the sole owner of
the Products and any intellectual property relating thereto. If any
improvements or modifications to the Products are developed by Warner or the
Manufacturer, either jointly or severally, such improvements or modifications
shall be the exclusive property of Warner and shall be held in confidence by
the Manufacturer for Warner’s sole benefit. The Manufacturer shall disclose to
Warner and receive the approval of Warner with respect to all such improvements
or modifications. Any trademarks, trade names, brand names, patents, slogans,
logos, copyrights, trade dress, know-how (except as otherwise provided herein)
and goodwill associated with the Products shall be the sole and exclusive
property of Warner. The Manufacturer shall have no right or license to use any
such rights at any time before, during or after the Term of this Agreement,
except as necessary for the manufacturing, processing, packaging and supplying
of Products for Warner hereunder.

 

16

 

(b)                                 It is agreed that Warner is the sole owner of
any and all tools, Specifications, blueprints and designs supplied or paid for
by Warner, and the Manufacturer shall not use, transfer, loan or publicize any
of the above except as necessary for its performance under this Agreement. The
Manufacturer shall maintain the above in good working order and shall ensure
that they remain free and clear of all liens and encumbrances.

 

(c)                                  The provisions of this Section 7.1 shall
survive the termination or expiration of this Agreement.

 

7.2.                                                                            The Manufacturer’s Ownership
of Other Property.

 

Except
as otherwise specified herein, it is agreed that the Manufacturer is the sole
owner of any and all machinery and equipment used by the Manufacturer in
connection with the Formulation of the Products in accordance with this
Agreement. This Agreement shall not be construed to grant to Warner any right,
title or interest to any trademark, trade name, copyright, patent or other proprietary
technology owned by or licensed to the Manufacturer or any improvements or
modifications thereto.

 

7.3.                                                                            Reproduction of and Right to
Use Trademarks Etc.

 

(a)                                  In connection with the Manufacturer’s
performance of this Agreement, Warner hereby grants the Manufacturer the right
to reproduce and print on the Products and/or Product packaging such
trademarks, trade dress, brand names and/or trade names of Warner that Warner
may designate in writing from time to time, strictly in accordance with trademark
usage and packaging guidelines set forth in the Specifications or otherwise
provided by Warner. Samples of all such uses of Warner’s trademarks, trade
dress, brand names and/or trade names on the Products or Product packaging
shall be submitted to Warner for its written approval prior to production. The
permission granted to the Manufacturer herein is restricted to usage of such
trademarks, trade dress, brand names and/or trade names on or in connection
with the Products supplied under this Agreement, and such permission extends
only for the Term of this Agreement or such shorter period as may be designated
or required by Warner.

 

(b)                                 Nothing set forth in this Agreement shall be
construed to grant to the Manufacturer any title, right or interest in or to
any trademark, trade dress, trade name, brand name, copyright, patent or other
proprietary technology owned by or licensed to Warner or any of its Affiliates.
The Manufacturer’s use of such trademarks, trade dress, trade names, brand
names, copyrights, patents or other proprietary technology shall be limited
exclusively to its performance of this Agreement. Any other use of said
trademarks, trade dress, trade names, brand names, copyrights, patents or other
proprietary technology (unless otherwise specified herein) shall constitute an
infringement thereof and/or violation of Warner’s rights.

 

7.4.                                                                            Manufacture of Competing
Products.

 

***

 

 

17

 

***

 

Section 8.                                          Indemnification.

 

8.1.                                                                            The
Manufacturer’s Indemnification of Warner.

 

The Manufacturer shall indemnify and hold Warner, its Affiliates and
their respective officers, directors, employees and agents harmless from and
against any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject at any time, by reason of any Action or
Proceeding to the extent arising out of or resulting from (i) any breach of its
representations, warranties or obligations under this Agreement (including a
breach that results in a rejection or Recall of the Products), or
nonfulfillment of or failure to perform any covenant or agreement made by the
Manufacturer in this Agreement; (ii) any actual or alleged injury to Person or
property or death occurring to any Manufacturer employees, subcontractors,
agents or any individuals on the Manufacturer’s premises; (iii) the possession,
use or consumption by any person of any Product supplied by the Manufacturer
under this Agreement that does not comply with the Specifications therefor; or
(iv) any other negligent act or omission on the part of the Manufacturer, its
Affiliates or their respective employees or agents; unless in any such event
such Losses arise as a result of any negligent act or omission on the part of
Warner, its Affiliates or their respective employees or agents, any breach by
Warner of its representations, warranties or obligations under this Agreement,
or nonfulfillment of or failure to perform any covenant or agreement made by
Warner in this Agreement.

 

8.2.                                                                            Warner’s Indemnification of the
Manufacturer.

 

Warner shall indemnify and hold the Manufacturer, its Affiliates and
their respective officers, directors, employees and agents harmless from and
against any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject at any time, by reason of any Action or
Proceeding to the extent arising out of or resulting from any breach of its
representations, warranties or obligations under this Agreement, or
nonfulfillment of or failure to perform (i) any covenant or agreement made by
Warner in this Agreement, (ii) the use, manufacture, marketing, sale and/or
distribution of any or all of the Products, unless such liability arises as a
result of (A) any negligent act or omission on the part of the Manufacturer,
its Affiliates or their respective employees or agents, (B) any breach by the
Manufacturer of its representations, warranties or obligations under this
Agreement or (C) nonfulfillment of or failure to perform any covenant or
agreement made by the Manufacturer in this Agreement, or (iii) the infringement
by Warner of the intellectual property rights of any person.

 

8.3.                                                                            Assertion of Claim.

 

In the event that any claim is asserted against any party hereto, or
any party hereto is made a party defendant in any Action or Proceeding, and
such Action or Proceeding involves a matter which is subject to a claim for
indemnification under this Section 8, then such party (an “Indemnified
Party”) shall promptly give
written notice to the other party (the “Indemnifying Party”) of such
Action or Proceeding, and such Indemnifying Party shall have the

 

18

 

right
to join in the defense of said Action or Proceeding, at such Indemnifying Party’s
own cost and expense. If the Indemnifying Party agrees in writing to be bound
by and to promptly pay the full amount of any final judgment from which no
further appeal may be taken and if the Indemnified Party is reasonably assured
of the Indemnifying Party’s ability to satisfy such agreement, then at the
option of the Indemnifying Party, such Indemnifying Party may take over the
defense of such Action or Proceeding, except that, in such case, the
Indemnified Party shall have the right to approve any attorney or counsel
selected by the Indemnifying Party (which approval shall not be unreasonably
delayed or withheld) and to join in the defense of said Action or Proceeding at
its own cost and expense. In no event shall (i) the Manufacturer institute,
settle or otherwise resolve any Action or Proceeding or potential Action or
Proceeding relating to the Products or any trademarks, patents or other
intellectual property of or licensed to Warner without the prior written
consent of Warner, which consent shall not be unreasonably withheld or delayed;
or (ii) Warner institute, settle or otherwise resolve any Action or Proceeding
or potential Action or Proceeding relating to any patents or other intellectual
property of or licensed to the Manufacturer without the prior written consent
of the Manufacturer, which consent shall not be unreasonably withheld or
delayed.

 

8.4.                                                                            Survival.

 

The indemnification obligations set forth in this Section 8 shall
survive termination or expiration of this Agreement.

 

8.5.                                                                            Consequential Damages.

 

Notwithstanding any provisions of this Agreement which might otherwise
be to the contrary, neither party shall be liable to the other for lost profits
or consequential damages.

 

Section 9.                                          Insurance.

 

9.1.                                                                            Coverage.

 

The Manufacturer shall, as of the date hereof, obtain and keep in force
throughout the Term of this Agreement and for a period of three (3) years from
the date of the last delivery of Products to Warner hereunder, policies of
insurance from carriers reasonably acceptable to Warner providing coverage as
specified in Schedule E attached hereto and incorporated herein by
reference.

 

9.2.                                                                            Certificates of Insurance;
Maintenance of Coverage.

 

The Manufacturer shall submit a certificate of such insurance (which
shall include, without limitation, such information as set forth in Schedule E)
to Warner for its approval within thirty (30) days after execution of this
Agreement. If such certificate is not furnished within such thirty (30) day
period, Warner shall notify the Manufacturer in writing and give the
Manufacturer thirty (30) days to cure such breach. If the Manufacturer fails to
provide the certificate during such thirty (30) day cure period, Warner may, at
its option, immediately terminate this Agreement.

 

19

 

Section 10.                                   Confidential Information

 

10.1.                                                                     Confidential Information.

 

(a)                                  In performing the obligations under this
Agreement, each party shall come in contact with certain confidential and
proprietary information of the other party (“Information”). Each party
agrees that it will:

 

(i)                                     use such Information obtained from the other
party hereunder only in connection with the activities to be undertaken by each
party as contemplated hereunder;

 

(ii)                                  use its best efforts to restrict disclosure
of such Information within its own organization to those of its employees and
employees of its consultants having a reasonable need to know and inform such
employees of the confidential nature of such Information and the parties’
obligations with respect thereto; and

 

(iii)                               not divulge to third parties, without the prior written consent of the
other party, any Information obtained from the other party hereunder.

 

The
foregoing confidentiality obligations shall not apply if and to the extent
that:

 

(i)                                     the Information is known to the receiving
party prior to obtaining the same from the disclosing party, as properly
demonstrated by the receiving party’s written records;

 

(ii)                                  the Information is, at the time of
disclosure, in the public domain, or comes into the public domain without any
fault of the receiving party or its Affiliates;

 

(iii)                               the Information is obtained by the receiving party from a third party
who is not obligated to keep the Information confidential;

 

(iv)                              the Information is independently developed by employees of the receiving
party and/or by employees of any of its Affiliates, as properly demonstrated by
the receiving party’s written records; or

 

(v)                                 the Information is required by Law to be
disclosed, in which case the party required to disclose such Information shall
provide as much prior notice to the other party as is practicable under the
circumstances in order to permit the other party to obtain confidential
treatment of such Information.

 

Upon
expiration or termination of this Agreement, each party shall return to the
other party all Information received from the other party.

 

(b)                                 The Manufacturer agrees not to use or refer
to Warner’s name or this Agreement in any public statements, whether oral or
written, including but not limited to,

 

20

 

annual
reports or shareholder reports, statements to other customers or prospective
customers or other communications, without Warner’s prior written consent,
which consent shall not be unreasonably withheld or delayed.

 

Section 11.                                   Term,
Termination

 

11.1.                                                                     Initial
Term; Term.

 

Unless terminated in accordance with the provisions of this Agreement,
the initial term (the “Initial Term”) of this Agreement shall commence
as of the date hereof and shall continue until December 31, 2004. Following
the expiry of the Initial Term, this Agreement shall, subject to Section 11.2,
automatically renew for consecutive one year periods unless and until either
party hereto submits to the other party hereto written notice of its intention
not to renew this Agreement given:

 

(i)                                     in the case of Group I Products, at least
twenty-four (24) months prior to the end of the Initial Term or thereafter at
any time on not less than twenty-four (24) months prior written notice; and

 

(ii)                                  in the case of Group II Products, at least
eighteen (18) months prior to the end of the Initial Term or thereafter at any
time on not less than eighteen (18) months prior written notice.

 

The
Initial Term and all renewals thereof collectively shall be referred to herein
as the “Term”.

 

11.2.                                                                     Termination.

 

This Agreement may be terminated at any time:

 

(a)                                  by either party immediately, upon written
notice to the other party, if (i) such other party (1) applies for or consents
to the appointment of, or the taking of possession by, a receiver, receiver and
manager, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (2) makes an assignment in bankruptcy for the benefit of
its creditors under the Bankruptcy and
Insolvency Act (Canada), (3) makes a proposal in bankruptcy under
the Bankruptcy and Insolvency Act (Canada),
(4) files a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, including without limitation the Companies’ Creditors Arrangement Act (Canada),
or (5) takes any corporate action for the purpose of effecting any of the
foregoing; or (ii) a proceeding or case shall be commenced without the
application or consent of such other party, in any court of competent
jurisdiction, seeking (1) such other party’s liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts, (2)
the appointment of a trustee, receiver, receiver and manager, custodian,
liquidator or the like of such other party or of all or any substantial part of
its assets, or (3) similar relief in respect of such other party under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, including without limitation the Companies’ Creditors Arrangement Act (Canada),
and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of thirty (30) or

 

21

 

more
days, or an order for relief against such other party shall be entered in an
involuntary case under the Bankruptcy and
Insolvency Act (Canada); or

 

(b)                                 subject to the following subparagraph, by
either party upon a material breach of this Agreement by the other party if
such other party fails to cure such breach within thirty (30) days after
receipt of written notice thereof; or

 

(c)                                  by Warner upon written notice to the
Manufacturer if in Warner’s reasonable opinion an inspection pursuant to this
Agreement reveals that any Facility does not comply with current GMP or other
requirements of applicable Law to such an extent that in Warner’s reasonable
opinion the Manufacturer cannot perform its obligations under this Agreement
and if the Manufacturer fails to cure such lack of compliance within thirty
(30) days of notice being given; or

 

(d)                                 by either party in the event of the direct or
indirect change in ownership or control or corporate reorganization of the
other party, which results in a new party or group assuming control of the
other party, upon notice given by the first party within ninety (90) days of
such change; provided that any such notice of termination shall only be
effective within the time period contemplated in Section 11.1 (i) or (ii),
as the case may be; or

 

(e)                                  by Warner with respect to any Product upon at
least ninety (90) days prior written notice to the Manufacturer in the event
that such Product is discontinued by Warner for any reason; provided
that Warner shall comply with the provisions of Schedule B hereof with
respect to such Product; or

 

(f)                                    by either party with respect to any Product
in the event that such Product is the subject of a final executed sale
agreement between Warner and a third party; provided that both parties
shall comply with the provisions of Schedule B hereof with respect to such
Product; or

 

(g)                                 pursuant to Section 9.2, 12.1 or 13.4 of
this Agreement.

 

11.3.                                                                     Effect of Termination.

 

Termination of this Agreement shall not affect any obligation to pay
money, indemnify, reimburse or maintain confidentiality which either party
hereto may have incurred during the Term hereof.

 

11.4.                                                                     Unused Materials.

 

Within ninety (90) days of the effective date of the expiration or
termination of this Agreement for any reason, Warner may, at its option,
purchase at cost any Materials that the Manufacturer has purchased exclusively
for Warner in accordance with this Agreement for the production of the
Products. Upon the expiration or termination of this Agreement, Warner may, at
its option, place orders with the Manufacturer for the manufacture of
additional Products in order to exhaust existing stocks of Materials. Any
packaging materials associated with the Products that are not purchased by
Warner pursuant to this Section 11.4 shall be disposed of or destroyed in
accordance with Warner’s instructions.

 

22

 

11.5.                                                                     Returns of Materials, etc.
Supplied by Warner.

 

(a)                                  Upon the effective date of expiration or
termination of this Agreement for any reason whatsoever, the Manufacturer shall
immediately deliver to Warner all Specifications (and copies thereof), artwork,
labels, bottles, all premiums and packaging materials purchased by Warner and
all other materials, supplies, equipment or proprietary materials provided by
Warner; provided, however, that, at Warner’s option, to the
extent that Warner has supplied any equipment, molds and/or any tablet press tooling
to the Manufacturer in connection herewith, the Manufacturer will remove such
equipment, molds and tablet press tooling from the Facility and have such
equipment, molds and tooling on its dock ready for Warner to transport; and
such reasonable removal and transportation costs shall be borne by Warner
except to the extent otherwise provided herein. Warner shall be liable for all
risk of loss, except any risk due to the Manufacturer’s negligence (or that of
its employees, agents or contractors) once such equipment, molds and tablet
press tooling are loaded onto the Manufacturer’s dock. The Manufacturer shall
maintain ownership of all other equipment utilized in connection herewith.

 

(b)                                 Upon the effective date of expiration or
termination of this Agreement for any reason whatsoever, the Manufacturer shall
also deliver to Warner, in accordance with Section 4.3, all Products
manufactured hereunder and shall invoice Warner in accordance with the terms of
Section 4.2. Any Product quarantined by the Manufacturer at the time of
expiration or termination of this Agreement shall be disposed of or destroyed
in accordance with Warner’s instructions. Notwithstanding the foregoing, on
termination of this Agreement by Warner in accordance with Section 11.2(a),
(b), (c), (d) or (g), the Manufacturer shall be responsible for the costs of
any Materials purchased in accordance with forecast requirements and for any
above-mentioned removal and transportation costs, in addition to any other
remedies available to Warner. Notwithstanding the foregoing, on termination of
this Agreement by the Manufacturer in accordance with Section 11.2(a),
(b), (d) or (g), Warner shall be responsible for the costs of any Materials
purchased in accordance with forecast requirements and for any above-mentioned
removal and transportation costs, in addition to any other remedies available
to the Manufacturer. Subsequent to the expiration or termination of this
Agreement, the parties shall continue to be responsible for rejected Products,
in accordance with the terms of Section 5.13.

 

11.6.                                                                     Maintenance of Records.

 

Upon the effective date of expiration or termination of this Agreement,
all quality control and assurance records will be maintained by the
Manufacturer for a minimum of three (3) years following production, or such
other reasonable time period specified by Warner in writing.

 

11.7.                                                                     Harmonization Plans;
Transition.

 

(a)                                  ***

 

23

 

***

 

Section 12.            Force Majeure.

 

12.1.                       Force Majeure.

 

No
failure or omission by the parties hereto in the performance of any obligation
of this Agreement shall be deemed a breach of this Agreement nor shall it
create any liability, if the same shall arise from any cause or causes beyond
the reasonable control of the affected party (an event of “Force Majeure”),
including, but not limited to, the following: acts of God; fire; storm; flood;
earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes;
and lockouts or the like; provided that the party so affected shall use
commercially reasonable best efforts to avoid or remove such causes of
non-performance and shall continue performance

 

24

 

hereunder with the utmost
dispatch whenever such causes are removed. The party prevented from performing
its obligations or duties because of Force Majeure shall promptly notify the
other party hereto of the occurrence and particulars of such Force Majeure and
shall provide the other party hereto, from time to time, with its best estimate
of the duration of such Force Majeure and with notice of the termination
thereof. In the event a Force Majeure prevents performance by one party for
more than three (3) months the other party shall have the right to immediately
terminate this Agreement. Neither of the parties shall be liable to the other
party for direct, indirect, consequential, incidental, special, punitive or
exemplary damages arising out of or relating to the suspension or termination
of any of its obligations or duties under this Agreement by reason of the
occurrence of Force Majeure.

 

Section 13.            Miscellaneous.

 

13.1.                       Year 2000 Compliance.

 

The
Manufacturer has adopted and is implementing a Year 2000 Compliance work plan
and hereby represents and warrants to Warner that Year 2000 Compliance will not
have a material adverse effect on the Manufacturer’s ability to Formulate and
deliver the Products for and to Warner in accordance with the terms and conditions
of this Agreement and the Quality Agreement or to otherwise comply with its
obligations under this Agreement.

 

13.2.                       Compliance with Laws.

 

The
Manufacturer shall not be required to manufacture or otherwise be involved in
the distribution of any Product as to which:

 

(i)            any Person claims the manufacture or
distribution infringes or otherwise violates any Law respecting patent or trade
marks unless Warner secures its indemnification hereunder with respect to same
in a manner reasonably satisfactory to the Manufacturer;

 

(ii)           any Governmental or Regulatory Authority alleges such manufacture or
distribution violates any Law. Warner shall provide immediate written notice of
any claim of any Governmental or Regulatory Authority to the Manufacturer.
Warner shall promptly reimburse the Manufacturer for all of the Manufacturer’s
cost and expense incurred as a result of any action or allegations described in
this Section to the extent not otherwise payable by Warner pursuant to this
Agreement.

 

13.3.                       Relationship of the Parties.

 

The
parties shall be deemed independent contractors with respect to the terms and
provisions of this Agreement and shall not in any respect act as an agent or
employee of the other party. All persons employed by the Manufacturer in connection
with the manufacture and supply of the Products to Warner shall be employees,
agents or contractors of the Manufacturer. Under no circumstances shall
employees or agents of one party be deemed to be employees or agents of the
other party.

 

25

 

13.4.                       Assignment.

 

Neither
party shall, without the prior written consent of the other party, delegate,
transfer, convey, assign or pledge any of its rights or obligations under this
Agreement to any other Person without the other party’s prior written consent; provided,
however, that if at any time during the Term of this Agreement, the
Manufacturer is acquired by or becomes an Affiliate of a competitor of Warner,
which competitor is a manufacturer, supplier and/or distributor of products
competitive with the Products, then Warner may terminate this Agreement upon
thirty (30) days written notice. This Agreement shall be binding upon and,
subject to the terms of the foregoing sentence, inure to the benefit of the parties
hereto, their respective successors, legal representatives and permitted
assigns.

 

13.5.                       Notice.

 

Unless
otherwise set forth herein, all notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally (including by overnight courier) or by facsimile
transmission (receipt confirmed by telephone) to the party at the following
address or facsimile numbers set forth:

 

	
  If to Warner:

  	
  Warner-Lambert Canada Inc.

  
	
   

  	
  2200 Eglinton Avenue East

  
	
   

  	
  Scarborough, Ontario

  
	
   

  	
  Canada

  	
  M1L 2N3

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Vice-President, Finance

  
	
   

  	
  Facsimile No.:

  	
  416-288-2424

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Warner-Lambert Company

  
	
   

  	
  201 Tabor Road

  
	
   

  	
  Morris Plains, NJ

  
	
   

  	
  U.S.A.

  	
  07950

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention: 

  	
  General Counsel

  
	
   

  	
  Facsimile No.:

  	
  973-540-3927

  
	
   

  	
   

  	
   

  
	
  If to the Manufacturer:

  	
  Draxis Pharma Inc.

  
	
   

  	
  16751 Trans Canada Highway

  
	
   

  	
  Kirkland, Quebec

  
	
   

  	
  Canada 

  	
  H9H 4J4

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  President

  
	
   

  	
  Facsimile No.:

  	
  514-694-3841

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
  Draxis Health Inc.

  
	
   

  	
  6870 Goreway Drive

  
	
   

  	
  Mississauga, Ontario

  
	
   

  	
  Canada 

  	
  L4V 1P1

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention: 

  	
  General Counsel

  
	
   

  	
  Facsimilie No.:

  	
  905-677-5494

  
				

 

26

 

 

The
above addresses for receipt of notice may be changed by either party by notice,
given as provided herein.

 

13.6.                       Entire Agreement.

 

This
Agreement, including the Specifications and all Schedules attached hereto and
made a part hereof, contains the entire understanding of the parties,
superseding in all respects any and all prior oral or written agreements or
understandings pertaining to the subject matter hereof. This Agreement may be
amended or modified only by written agreement executed by the parties hereto.

 

13.7.                       Incorporation of Schedules.

 

The
Schedules attached to this Agreement are incorporated by reference herein and
made a part hereof.

 

13.8.                       Severability.

 

If
any provision of this Agreement is held to be illegal, invalid or unenforceable
under any applicable present or future Law, and if the rights or obligations of
any party hereto under this Agreement will not be materially and adversely
affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance therefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement, a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.

 

13.9.                       Waiver.

 

Any
term or condition of this Agreement may be waived at any time by the party that
is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party or parties waiving such term or condition. No waiver by any party of any
term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.

 

13.10.                     Headings.

 

Headings
in this Agreement are included for ease of reference only and have no legal
effect.

 

27

 

13.11.                     Counterparts.

 

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

 

13.12.                     Governing Law.

 

This
Agreement shall be governed by and construed in accordance with the laws of the
Province of Ontario and the laws of Canada applicable thereon, without giving
effect to the conflict of laws principles that might otherwise govern.

 

13.13.                     Language.

 

The
Parties have expressly requested that this Agreement as well as all documents
relating hereto be drawn up in the English language. Les parties exigent que
cette convention et tous les documents s’y rattachant soient rédigés en
anglais.

 

13.14.                     Paramountcy.

 

In
the event of any inconsistency or conflict between or among the provisions of
this Agreement and those of any of the Schedules (including any agreement
entered into pursuant to this Agreement or the Schedules), the terms of this
Agreement shall prevail and the parties hereto shall take such steps as may be
required or desirable to conform the conflicting provisions thereof to this
Agreement.

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and to be effective as of the date first above written.

 

	
   

  	
  WARNER-LAMBERT
  CANADA INC. 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jennifer Smith

  	
   

  
	
   

  	
   

  	
  Name: Jennifer Smith

  
	
   

  	
   

  	
  Title: VP & General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Kaju

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  PETER KAJU

  
	
   

  	
   

  	
  Title:  FINANCIAL SERVICES DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  DRAXIS
  PHARMA INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dwight Gorham

  	
   

  
	
   

  	
   

  	
  Name:  DWIGHT GORHAM

  
	
   

  	
   

  	
  Title:  PRESIDENT

  
					

 

28

 

SCHEDULE A

 

PRODUCTS TO BE SUPPLIED BY THE
MANUFACTURER

 

Group I Products

 

	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin ear-drop

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin Ophthalmic

  	
   

  	
  ***

  

 

Group II Products

 

	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin Cream

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Poly.Triple Oint.

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Zincofax Xtra-Strength

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Orig.Club/Whs

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  

 

 

	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES 60mg

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Decongestant 30mg

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lanolelle Cream

  	
   

  	
  ***

  
	
  ***

  	
   

  	
  U.S. Borofax

  	
   

  	
  ***

  

 

2

 

SCHEDULE A(2)

 

***

 

 

 

SCHEDULE B

 

OPERATING PROVISIONS

 

***

 

 

 

 

***

 

 

 

2

 

***

 

3

 

***

 

4

 

***

 

 

 

5

 

SCHEDULE C

 

PRICE SCHEDULE

 

Group I Products

 

	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  	
   

  	
  Product Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin ear-drop

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin eye/ear

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ophthalmic

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  

 

Group II Products

 

	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  	
   

  	
  Product Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Lidosporin Cream

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin Plus Pain Relief

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Polysporin Ointment

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Poly.Triple Antibiotic Oin.

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Poly.Triple Oint.

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Zincofax Xtra-Strength

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Orig.Club/Whs

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Original

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Zincofax Fragrance Free

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Plus Caplets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Actifed Tablets

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed C/C Cap. ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant 12hr

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	
  ***

  	
   

  	
  Sudafed Decongestant ES

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  

 

 

	
  Product
  No.

  	
   

  	
  Product Description

  	
   

  	
  Product Size

  	
   

  	
  Product Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Decongestant ES 60mg

  	
   

  	
  ***

  	
   

  	
  $

  	
   

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Decongestant 30mg

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
  ***

  	
   

  	
  Sudafed Head Cold&Sinus

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
  ***

  	
   

  	
  Lanolelle Cream

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
	 
	
  ***

  	
   

  	
  U.S. Borofax

  	
   

  	
  ***

  	
   

  	
  $

  	
  ***

  	
   

  
										

 

Upon shipment of any Product, the Manufacturer shall invoice Warner at
the Price for such Product.

 

 

 

2

 

***

 

 

 

3

 

SCHEDULE D

 

CANADA

 

QUALITY AGREEMENT

 

Capitalized terms used in
this Quality Agreement shall have the meaning set forth in the Manufacturing
and Supply Agreement to which this Quality Agreement is attached (the “Supply
Agreement”). Warner and Manufacturer hereby agree to the following terms
relating to key quality and regulatory systems involved in the manufacture of
the Products. These agreements may be modified only in writing signed by both
parties.

 

I.              Definitions

 

The
terms set forth in this Quality Agreement shall have the meanings as set out
below:

 

“Action Plan” shall have the meaning set out in Section XIV(2).

 

“Certificate of Analysis” shall mean the certificate prepared by the
Manufacturer in respect of each Product lot which shall summarize, inter alia, (i) any and all test methods
used in respect of said Product lot, (ii) any and all Specifications for such
test methods, and (iii) any and all test results obtained, all as from time to
time may be required by applicable Laws.

 

“Certificate of Compliance” shall mean the certificate prepared by the
Manufacturer in respect of each Product lot which shall confirm, inter alia, that such Product lot was
Formulated in accordance with the Specifications, GMP and applicable Laws, all
as from time to time may be required by applicable Laws.

 

“Establishment License” shall mean the annual license issued to the
Manufacturer pursuant to the Health Canada Therapeutics Products Program.

 

“Expiration Date” shall have the meaning set out in Section VI(6).

 

“Marketing Authorization” shall mean, with respect to each Product, any
and all authorizations necessary to sell such Product in the applicable country
as granted by the relevant Governmental or Regulatory Authority.

 

“Out-of-Specification” or “OOS” shall
mean, with respect to any Product, a deviation from or failure to comply with
or conform to the Specifications for said Product.

 

 

“Site Reference File” shall have the meaning set forth in the Site
Reference File Guideline issued by the Canadian Bureau of Drugs Surveillance,
as the same may be amended from time to time.

 

“Warner Quality Assurance employee” shall mean the Warner employee who is
responsible for monitoring, maintaining and ensuring compliance with the terms
and conditions of this Quality Agreement and shall include his/her replacement,
successor or designee, as the case may be.

 

“Warner Regulatory Affairs employee” shall mean the Warner employee who is
responsible for monitoring, maintaining and ensuring compliance with applicable
regulatory requirements in the United States and Canada, as applicable, and
shall include his/her replacement, successor or designee, as the case may be.

 

“Work in Progress” shall mean any Materials which have been partially converted into, but
are not yet, Products and any Products that have not yet been released for sale
or distribution by the Manufacturer.

 

II.            Annual Product Reviews and Reports

 

(1)           The Manufacturer shall prepare an APR for each Product. Each APR shall
include, but shall not necessarily be limited to, the following information:
(i) stability data, (ii) the total number of Product batches Formulated during
the APR period, including related analytical data for all Product batches which
passed or failed quality or other testing during the APR period, (iii) an
investigation summary in respect of each Canadian Product batch failure, and
(iv) a summary of any significant Product processing, packaging or analytical
changes. A copy of the final APR must be forwarded by the Manufacturer to
Warner within five (5) Business Days of completion.

 

III.           Document and Sample Retention

 

(1)           The Manufacturer shall retain all documents, records and reports associated
with the Formulation of any and all Product lots, including any and all
investigation reports related thereto, for at least one (1) year following the
Expiration Date for each such finished Product lots, or as otherwise directed
by Warner.  All such documents, records
and reports shall be stored and maintained by the Manufacturer in such a manner
that they are (i) readily retrievable and (ii) protected from damage or loss.
At the request of Warner, acting reasonably, the Manufacturer shall provide
copies of all such documents, records and reports to Warner.

 

(2)           The Manufacturer shall retain samples from each incoming lot of Material
in an amount sufficient to permit the performance of at least two (2) full rounds
of analytical testing. The Manufacturer shall hold and retain such samples for
a minimum of one (1) year following the expiration of the last

 

2

 

lot
of finished Product containing said Material. At the request of Warner, acting
reasonably, the Manufacturer shall provide such samples to Warner.

 

IV.           Deviations and Failures

 

(1)           The Manufacturer shall have a written procedure in place for performing
a systematic investigation for cause in the event that (i) any Product or process
fails to meet Specifications or (ii) any process deviation occurs in respect of
any Product.

 

(2)           The Manufacturer shall not void OOS results by retesting unless (i) the
investigation determines that laboratory error caused the OOS results, or (ii)
the cause of the OOS results cannot be determined.

 

(3)           All OOS data and investigation results, whether or not the OOS results are
voided by the Manufacturer, shall be retained by the Manufacturer pursuant to
Section III(1) hereof.

 

(4)           Except as noted in Sections V and VI, the Manufacturer shall notify the
Warner Quality Assurance employee within three (3) Business Days of the occurrence
of any OOS results or major process deviation in respect of any Product. All
quality decisions regarding any such OOS results or major process deviation
shall be made by the Manufacturer in consultation with Warner.

 

(5)           All OOS or process deviation investigations shall be completed, documented
and approved by the Manufacturer prior to the issuance of a Certificate of
Compliance or a Certificate of Analysis pursuant to Section XV.

 

V.            Complaint and Adverse Event Handling

 

(1)           The Manufacturer shall notify, in writing, the Warner Quality Assurance
employee within twenty-four (24) hours of initial receipt by the Manufacturer
of any complaint, whether oral or written, concerning suspected or actual
Product tampering, mix-up or contamination. 
The Manufacturer shall notify, in writing, the Warner Quality Assurance employee
within four (4) Business Days of initial receipt by the Manufacturer of all
other Product-related complaints, whether oral or written.

 

(2)           At the request of the Warner Quality Assurance employee, the Manufacturer
shall investigate Product complaints and shall comply with all reasonable
requests for documents, retained samples or information made by Warner in
connection with a Product complaint or Product complaint investigation. If
appropriate, the Warner Quality Assurance

 

3

 

employee
shall provide to the Manufacturer a recommended Product complaint investigation
plan.

 

(3)           The Manufacturer shall complete and document each Product complaint investigation
within thirty (30) Business Days following initial receipt of the complaint by
the Manufacturer, or such later date as may be consented to, in writing, by
Warner, which consent shall not be unreasonably withheld; provided, however,
that the Product complaint investigation shall be completed by the Manufacturer
within sixty (60) Business Days following initial receipt by the Manufacturer
of the Product complaint.

 

(4)           In the event Warner consents to an extension of a Product complaint investigation,
pursuant to Section V(3) above, the Manufacturer shall, deliver to the Warner
Quality Assurance employee an interim Product complaint investigation report on
or before the 30th Business Day of the Product complaint investigation.  The interim Product complaint investigation
report shall include, but shall not be limited to, test results obtained to
date and a target completion date.

 

(5)           The Manufacturer shall deliver to the Warner Quality Assurance employee
the final Product complaint investigation report within five (5) Business Days
following completion of the Product complaint investigation. Warner shall be
solely responsible for determining when a Product complaint investigation has
been completed and shall have sole responsibility for responding to a Product
complaint.

 

(6)           The Manufacturer shall retain all unused Product complaint samples in properly
labelled storage containers for a minimum of ninety (90) calendar days
following delivery to Warner of the final Product complaint investigation
report.

 

(7)           The Manufacturer shall notify the Warner Quality Assurance employee of any
OOS results in respect of any Product complaint sample within one (1) Business
Day following the occurrence or detection of such OOS results.  The Manufacturer shall investigate any and
all OOS results in respect of a Product complaint sample as described in
Section IV.

 

(8)           The Manufacturer shall notify the Warner Quality Assurance employee or the
Warner Regulatory Affairs employee, as appropriate, immediately and, in any
event, within one (1) calendar day of receipt of a report, whether oral or
written, from any source of any adverse event in respect of any Product. Warner
shall be solely responsible for investigating any adverse event and for
determining if, when and to what extent such adverse event shall be reported to
a Governmental or Regulatory Authority. At the request of Warner, the
Manufacturer shall assist Warner with the evaluation or investigation of any
adverse event, including, but

 

4

 

not
limited to, testing Product samples and reviewing Product batch manufacturing
and analytical records.

 

(9)           The Manufacturer shall retain all unused Product samples in respect of
each adverse event in properly labelled storage containers for a minimum of
twelve (12) months following the date on which the Manufacturer first notified
Warner of such adverse event.

 

VI.           Stability

 

(1)           The Manufacturer shall be responsible for conducting stability testing
on the Products in accordance with written stability protocols approved in writing
in advance by Warner.  The Manufacturer
shall retain at least three (3) times the minimum number of Product samples
required for full stability testing through expiration.

 

(2)           The Manufacturer shall continue through to completion all stability
studies initiated by the Manufacturer, notwithstanding Product discontinuation
or transfers or contract termination.

 

(3)           The Manufacturer shall place on stability all finished Product lots
which are selected for the annual stability program no later than thirty (30) calendar
days following final completion of finished Product release testing. The
finished Product release test results shall serve as the initial (time zero)
stability results. In the event that any finished Product lot is not placed on
stability within thirty (30) calendar days following final completion of
finished Product release testing, the Manufacturer shall promptly notify the
Warner Quality Assurance employee and shall repeat finished Product release
testing for said Product in order to establish an initial (time zero) stability
test result.

 

(4)           The Manufacturer shall initiate Product stability testing to be
performed at monthly intervals within seven (7) calendar days following the
scheduled pull date for the Product sample; provided, however, that any such Product
sample shall not be pulled in advance of the scheduled pull date.

 

(5)           The Manufacturer shall initiate Product stability testing to be
performed at intervals of three (3) months or longer within fourteen (14)
calendar days following the scheduled pull date for the Product sample;
provided, however, that any such Product sample shall not be pulled more than seven
(7) calendar days in advance of the scheduled pull date.

 

(6)           Product stability samples which are to be tested at the expiry test
station shall be pulled no earlier than seven (7) calendar days in advance of
the last day of the month in which the applicable Product lot expires (the “Expiration
Date”). The Manufacturer shall initiate Product stability testing of said
samples no later than seven (7) calendar days following the relevant Expiration
Date.

 

5

 

(7)           Product stability samples which are required for bioassay and microbiological
Product stability testing shall be pulled no later than seven (7) calendar days
before or after the scheduled pull date; provided, however, that any such
Product sample shall be pulled within the calendar month in which testing is
due.

 

(8)           The Manufacturer shall report any OOS results (including any initial
OOS results) in respect of any Product lot to the Warner Quality Assurance
employee within one (1) Business Day following the occurrence or detection of
any such OOS results.  The Manufacturer
shall use its best efforts to complete and document an investigation with
respect to any such OOS results within twenty (20) Business Days following
occurrence of such OOS results, or such later date as may be consented to by Warner
in writing, which consent shall not be unreasonably withheld; provided,
however, that such OOS investigation shall be completed by the Manufacturer
within forty (40) Business Days following the occurrence of the OOS results. In
the event that the Manufacturer and Warner agree that any OOS investigation will
exceed twenty (20) Business Days, the Manufacturer shall provide to the Warner
Quality Assurance employee on or before the 20th Business Day of any
such OOS investigation an interim report which shall include current test
results and a target completion date. The Manufacturer shall deliver a copy of
the final OOS investigation report to Warner within five (5) Business Days
following completion of such OOS investigation. At the request of Warner,
acting reasonably, the Manufacturer shall also provide to Warner any and all
information regarding any and all OOS investigations.

 

(9)           The Manufacturer’s quality unit shall track and review Product
stability data on a regular basis. The Manufacturer shall include Product
stability data in each APR.  At the
request of Warner, the Manufacturer shall make available to Warner for its
review and inspection any and all Product stability data.

 

VII.          Validation

 

(1)           Manufacturer will be responsible for validation procedures which
include cleaning, equipment, facility, process and packaging in accordance with
GMP and in compliance with applicable regulations. Process and packaging
validation protocols and final reports will be approved by Warner and
Manufacturer. All validation shall be properly documented and accessible to Warner
on request.

 

VIII.        Compliance

 

(1)           All Product lots which are supplied by the Manufacturer to Warner shall
be formulated in accordance with GMP, the Specifications, applicable Laws and
any and all Marketing Authorizations.

 

6

 

(2)           The Manufacturer shall fully comply with Health Canada Therapeutics
Product Program (TPP) regulations and guidelines at all times and shall
complete all filings required thereunder, including, but not limited to, the
filing of an Establishment License and the preparation of a Site Reference
File.

 

IX.           Recalls

 

Warner
shall be solely responsible for determining whether and when to Recall any
Product lot and for all matters relating to the implementation of the Recall.
At the request of Warner, the Manufacturer shall provide reasonable assistance
and cooperation with any Recall decisions.

 

X.            Control Document and Change Control
Implementation

 

The
Manufacturer shall maintain a formal system for controlling changes which may
affect the Formulation of Products, including, but not limited to, changes to
Materials and Product processing, packaging and analytical methods. Warner
shall be notified of and shall approve, in writing, any and all such changes
prior to implementation. The Manufacturer shall provide copies of all revised
master batch manufacturing orders to Warner on a timely basis.

 

XI.           Label Control

 

(1)           The Manufacturer shall maintain a formal system for Product label
control which shall ensure, inter alia, that
only those labels, graphics, printed matter and other packaging Materials which
have been approved and/or provided by Warner shall be used. The Manufacturer’s
Product label control system shall include, but shall not be limited to: (i)
secure storage of all packaging Materials, (ii) accountability records, (iii) on-line
verification of cut labels, and (iv) packaging line clearance of labelling. The
Manufacturer shall ensure that a sample of the label used in respect of a
Product shall be included in the batch/packaging record for the Product.

 

(2)           The Manufacturer shall sample, examine and approve all packaging Materials
prior to use.

 

(3)           Warner shall review and approve, in writing, all standards used by the Manufacturer
for comparison to samples of packaging Materials.

 

XII.         Training

 

(1)           The Manufacturer shall ensure that its staff, employees and other
personnel (i) are familiar with applicable GMP and (ii) receive initial and
ongoing GMP and other training relevant and specific to their job
responsibilities.

 

7

 

(2)           All training shall be conducted by qualified personnel in accordance
with a written program.

 

(3)           The Manufacturer shall retain all training records and shall
periodically assess the effectiveness of its ongoing training program.

 

XIII.        Regulatory Contacts

 

(1)           Warner shall be solely responsible for all
contacts and communications with any and all Governmental or Regulatory
Authorities in respect of the Products.

 

(2)           Unless required by applicable Laws, the Manufacturer
shall have no contact or communication with any Governmental or Regulatory
Authority in respect of the Products without the prior written consent of
Warner, which consent shall not be unreasonably withheld.  The Manufacturer shall notify the Warner
Quality Assurance employee or the Warner Regulatory Affairs employee, as
applicable, immediately and, in any event, no later than one (1) calendar day
following receipt by the Manufacturer of any contact or communication from a
Governmental or Regulatory Authority that in any way relates to any Product.

 

(3)           The Manufacturer shall provide to the Warner
Quality Assurance employee or the Warner Regulatory Affairs employee, as the
case may be, copies of any and all communications received from or sent to any Governmental
or Regulatory Authority with respect to any Product within one (1) calendar day
following receipt or sending of the communication, as the case may be.

 

XIV.        Audits by Warner

 

(1)           Upon reasonable prior written notice to the
Manufacturer and during the Manufacturer’s normal business hours, Warner shall
be permitted to:

 

(i)            periodically audit the Facility and all
documents and information associated with the Products; and,

 

(ii)           enter the Facility to review the Facility and all records associated
with the Products.

 

(2)           If, during the course of an audit, it is observed that the Manufacturer
is not operating in compliance with GMP, the Manufacturer shall prepare and
commence an action plan (the “Action Plan”) detailing the resolution of the
identified issues from the audit within thirty (30) calendar days following
receipt of Warner’s audit report.  Such
Action Plan shall be reasonably satisfactory to Warner.  Implementation of the Action Plan shall be at
the Manufacturer’s sole cost and expense. 
Failure on the part of the Manufacturer to implement the Action Plan in
a timely manner (in accordance with its terms) shall be grounds for termination
by Warner of

 

8

 

this
Quality Agreement and the Supply Agreement pursuant to Section 11 thereof.

 

XV.         Disposition of Materials

 

(1)           The Manufacturer shall formulate, hold and test any and all Product
lots in accordance with GMP, applicable Laws and the applicable Marketing Authorization
for such Products.

 

(2)           Prior to shipping or delivering any Product to Warner or its
Affiliates, the Manufacturer shall test each batch of Product to ensure that it
meets Specifications.  The Manufacturer
acknowledges that Warner will not accept Product lots that an outside alert or
release limits, as set forth in the Specifications. In the event Warner
determines that testing and/or record reviews for Product lots do not satisfy
GMP, Specifications or applicable Laws, Warner may return such Product lots to the
Manufacturer in accordance with the provisions of Section 5.13 of the Supply
Agreement.

 

(3)           The Manufacturer shall ensure that all Product batch records discrepancies
and samples have been reviewed by an employee of the Manufacturer with GMP and
other appropriate training to determine proper disposition thereof.

 

(4)           The Manufacturer shall provide to the Warner Quality Assurance employee
a copy of the Certificate of Compliance, the Certificate of Analysis and all
investigation reports relating to a Product batch.

 

(5)           The Manufacturer shall have in place a written procedure to ensure that
any and all Materials, packaging Materials, Work in Progress and Products that
do not conform to Specifications or applicable Laws are protected from
inadvertent use or resale. Such procedures shall include, but shall not be limited
to, the identification, segregation, evaluation and disposition of
non-conforming Materials, packaging Materials, Work in Progress and Products.  The Manufacturer shall maintain a designated area
for the storage of rejected Materials, packaging Materials, Work in Progress
and Products and shall ensure that same are disposed of in an environmentally
safe and timely manner consistent with all applicable Laws, the terms and
conditions of this Quality Agreement and the Supply Agreement, and, in any
event, as approved, in writing, in advance by Warner.

 

XVI.        Notices and Communications

 

The
parties shall forthwith exchange lists identifying (i) the names, titles,
addresses and telephone and telecopier numbers of all employees referred to in
this Agreement and (ii) the names and emergency telephone numbers (including
home, cell phone and mobile numbers, as applicable) of persons to be contacted

 

9

 

in
the event of a Recall.  Each party shall
promptly inform, in writing, the other party of any additions, deletions or
other revisions to such lists.

 

XVII.       Term

 

The
term of this Quality Agreement shall commence as of the date hereof and shall
terminate upon termination or expiration of the Supply Agreement.

 

XVIII.     Assignment

 

The
Manufacturer shall not, without the prior written consent of Warner, delegate,
transfer, convey, assign or pledge any of its rights or obligations under this
Quality Agreement to any other Person.

 

XIX.        Headings

 

Headings
in this Quality Agreement are included for ease of reference only and have no
legal effect.

 

10

 

SCHEDULE E

 

INSURANCE

 

The
Manufacturer shall acquire and maintain at its sole cost and expense:

 

(i)            Statutory Worker’s
Compensation Insurance and Employer’s Liability Insurance; and

 

(ii)           Comprehensive
General Liability Insurance, including Contract Liability, Products Liability,
Bodily Injury and Property Damage Insurance,

 

(with a Broad Form Vendor’s
Endorsement naming Warner, its subsidiaries and affiliated companies and the
officers, directors, employees and agents thereof, as well as its authorized
distributors and customers, as additional insureds) with a combined single
limit of not less than $5,000,000.

 

The Manufacturer shall
require its subcontractors, to the extent approved hereunder, to provide the
aforementioned coverages, and any deficiencies in the coverages or policy
limits of said subcontractors will be the sole responsibility of the
Manufacturer.

 

The certificate(s) of
insurance delivered to Warner hereunder will specify the dates such coverage
expires and provide further that no policy will be cancelled or amended to
reduce the amount of coverage or to eliminate coverage without thirty (30) days
prior written notice to Warner.

 

 

SCHEDULE F

 

SPECIFICATIONS

 

***Exhibit 4.41

 

Execution Copy

 

SUPPLY AGREEMENT

 

BETWEEN

 

GLAXOSMITHKLINE INC.

(A wholly owned subsidiary of
GlaxoSmithKline plc)

 

AND

 

DRAXIS PHARMA, INC.

 

DATED AS OF

 

DECEMBER 18, 2001

 

 

TABLE OF CONTENTS

 

	
  Article I

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article II

  	
   

  	
  Sale
  And Purchase Of Product

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  General

  	
   

  
	
  2.2

  	
   

  	
  Monthly Forecasts

  	
   

  
	
  2.3

  	
   

  	
  Purchase Orders

  	
   

  
	
  2.4

  	
   

  	
  Accommodations

  	
   

  
	
  2.5

  	
   

  	
  Key Performance Indicators

  	
   

  
	
  2.6

  	
   

  	
  Meetings and Reports

  	
   

  
	
  2.7

  	
   

  	
  Long-Term Forecasts

  	
   

  
	
  2.8

  	
   

  	
  Global Supply Chain

  	
   

  
	
  2.9

  	
   

  	
  Product
  Discontinuance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article III

  	
   

  	
  Prices For
  Products; Shipment; Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Price

  	
   

  
	
  3.2

  	
   

  	
  Annual Price Adjustments

  	
   

  
	
  3.3

  	
   

  	
  Annual Volume Discount Credits;
  Adjustment Fees

  	
   

  
	
  3.4

  	
   

  	
  Creditable Deposit

  	
   

  
	
  3.5

  	
   

  	
  Invoices

  	
   

  
	
  3.6

  	
   

  	
  Payment

  	
   

  
	
  3.7

  	
   

  	
  Payment Denominations

  	
   

  
	
  3.8

  	
   

  	
  Shipment; Title; Transport

  	
   

  
	
  3.9

  	
   

  	
  Records

  	
   

  
	
  3.10

  	
   

  	
  Taxes

  	
   

  
	
  3.11

  	
   

  	
  New Presentations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IV

  	
   

  	
  Manufacture Of
  Product

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Specifications

  	
   

  
	
  4.2

  	
   

  	
  Specification Changes

  	
   

  
	
  4.3

  	
   

  	
  Change Control Operating Procedure

  	
   

  
	
  4.4

  	
   

  	
  Storage Obligations

  	
   

  
	
  4.5

  	
   

  	
  Validations and Stability Studies

  	
   

  
	
  4.6

  	
   

  	
  Materials

  	
   

  
	
  4.7

  	
   

  	
  Long Lead Time Materials

  	
   

  
	
  4.8

  	
   

  	
  Reimbursement for Certain Materials

  	
   

  
	
  4.9

  	
   

  	
  Technical Terms of Supply

  	
   

  
	
  4.10

  	
   

  	
  Compliance Standards

  	
   

  
	
  4.11

  	
   

  	
  Certain Prohibitions

  	
   

  

 

i

 

	
  Article V

  	
   

  	
  Testing
  And Quality Assurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Quality
  Assurance; Quality Control

  	
   

  
	
  5.2

  	
   

  	
  Testing of Product

  	
   

  
	
  5.3

  	
   

  	
  GSK Holds and
  Rejections

  	
   

  
	
  5.4

  	
   

  	
  Deviation Report; Nonconformity

  	
   

  
	
  5.5

  	
   

  	
  Quantitative
  Deficiencies

  	
   

  
	
  5.6

  	
   

  	
  Product Complaints

  	
   

  
	
  5.7

  	
   

  	
  Adverse Events

  	
   

  
	
  5.8

  	
   

  	
  Investigations;
  Draxis’ Obligations

  	
   

  
	
  5.9

  	
   

  	
  Certain Product
  Events

  	
   

  
	
  5.10

  	
   

  	
  Disposition
  of Certain Products

  	
   

  
	
  5.11

  	
   

  	
  Credits

  	
   

  
	
  5.12

  	
   

  	
  Product Returns from the
  Field

  	
   

  
	
  5.13

  	
   

  	
  Samples

  	
   

  
	
  5.14

  	
   

  	
  Annual Product
  Review

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VI

  	
   

  	
  Regulatory
  Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Consents

  	
   

  
	
  6.2

  	
   

  	
  Product Consents

  	
   

  
	
  6.3

  	
   

  	
  Compliance with Laws

  	
   

  
	
  6.4

  	
   

  	
  Drag
  Application Documentation

  	
   

  
	
  6.5

  	
   

  	
  Regulatory Changes

  	
   

  
	
  6.6

  	
   

  	
  Import/Export
  Matters

  	
   

  
	
  6.7

  	
   

  	
  Regulatory
  Inspections

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VII

  	
   

  	
  Intellectual
  Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Ownership

  	
   

  
	
  7.2

  	
   

  	
  New
  Developments and Modifications

  	
   

  
	
  7.3

  	
   

  	
  Grant of
  Licenses

  	
   

  
	
  7.4

  	
   

  	
  Infringement

  	
   

  
	
  7.5

  	
   

  	
  Data

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article VIII

  	
   

  	
  Information;
  Access; Audit Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Provision of
  Information

  	
   

  
	
  8.2

  	
   

  	
  GSK
  Representatives

  	
   

  
	
  8.3

  	
   

  	
  Inspection
  Rights

  	
   

  
	
  8.4

  	
   

  	
  Documentation

  	
   

  
	
  8.5

  	
   

  	
  Access

  	
   

  
	
  8.6

  	
   

  	
  Audit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article IX

  	
   

  	
  Divested
  Products

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  General

  	
   

  
	
  9.2

  	
   

  	
  Effect of
  Divestment

  	
   

  
	
  9.3

  	
   

  	
  Governing
  Provisions

  	
   

  

 

ii

 

	
  9.4

  	
   

  	
  Intellectual
  Property

  	
   

  
	
  9.5

  	
   

  	
  Noncompetition

  	
   

  
	
  9.6

  	
   

  	
  Divested
  Product Inspection and Audit Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article X

  	
   

  	
  Representations
  And Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Representations
  and Warranties of Draxis

  	
   

  
	
  10.2

  	
   

  	
  Representations
  and Warranties of GSK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XI

  	
   

  	
  Liability
  And Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Indemnity by
  Draxis

  	
   

  
	
  11.2

  	
   

  	
  Indemnity by
  GSK

  	
   

  
	
  11.3

  	
   

  	
  Procedures

  	
   

  
	
  11.4

  	
   

  	
  Limitations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XII

  	
   

  	
  Insurance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Coverage
  Requirements

  	
   

  
	
  12.2

  	
   

  	
  Certificates
  of Insurance

  	
   

  
	
  12.3

  	
   

  	
  Additional
  Insured and Waiver of Subrogation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIII

  	
   

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Definition of
  “GSK Confidential Information”

  	
   

  
	
  13.2

  	
   

  	
  Definition of
  “Draxis Confidential Information”

  	
   

  
	
  13.3

  	
   

  	
  Treatment of
  Confidential Information

  	
   

  
	
  13.4

  	
   

  	
  Excluded
  Information

  	
   

  
	
  13.5

  	
   

  	
  Notification
  of Mandatory Disclosure

  	
   

  
	
  13.6

  	
   

  	
  Publicity

  	
   

  
	
  13.7

  	
   

  	
  Return of
  Confidential Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XIV

  	
   

  	
  Force
  Majeure Event

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  General

  	
   

  
	
  14.2

  	
   

  	
  Termination;
  Transition

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XV

  	
   

  	
  Term;
  Termination; Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  General

  	
   

  
	
  15.2

  	
   

  	
  Draxis
  Material Default

  	
   

  
	
  15.3

  	
   

  	
  Other Draxis
  Default

  	
   

  
	
  15.4

  	
   

  	
  Effect of
  Draxis Default

  	
   

  
	
  15.5

  	
   

  	
  GSK Material
  Default

  	
   

  
	
  15.6

  	
   

  	
  Other GSK
  Default

  	
   

  
	
  15.7

  	
   

  	
  Effect of a
  GSK Default

  	
   

  
	
  15.8

  	
   

  	
  Specified
  Payment Remedy

  	
   

  
	
  15.9

  	
   

  	
  Change in
  Control of Draxis

  	
   

  
	
  15.10

  	
   

  	
  Remedies

  	
   

  
	
  15.11

  	
   

  	
  Injunctive
  Relief

  	
   

  

 

iii

 

	
  Article XVI

  	
   

  	
  Noncompete

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
   

  	
  Covenant Not
  to Compete

  	
   

  
	
  16.2

  	
   

  	
  Period of
  Restriction

  	
   

  
	
  16.3

  	
   

  	
  Prohibited
  Markets

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Article XVII

  	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.1

  	
   

  	
  Standard
  Forms

  	
   

  
	
  17.2

  	
   

  	
  Notices

  	
   

  
	
  17.3

  	
   

  	
  Independent
  Contractors

  	
   

  
	
  17.4

  	
   

  	
  Entire
  Understanding

  	
   

  
	
  17.5

  	
   

  	
  Unintentional
  Omissions

  	
   

  
	
  17.6

  	
   

  	
  Transferability;
  Binding Effect

  	
   

  
	
  17.7

  	
   

  	
  Dispute
  Resolution

  	
   

  
	
  17.8

  	
   

  	
  Subcontractors

  	
   

  
	
  17.9

  	
   

  	
  Amendment

  	
   

  
	
  17.10

  	
   

  	
  Severability

  	
   

  
	
  17.11

  	
   

  	
  Waiver

  	
   

  
	
  17.12

  	
   

  	
  Survival

  	
   

  
	
  17.13

  	
   

  	
  Drafting
  Ambiguities

  	
   

  
	
  17.14

  	
   

  	
  Headings;
  Schedules; Exhibits; Counterparts

  	
   

  
	
  17.15

  	
   

  	
  Governing
  Law

  	
   

  
	
  17.16

  	
   

  	
  Language

  	
   

  

 

iv

 

	
  SCHEDULES TO AGREEMENT

  
	
   

  
	
  2.5

  	
   

  	
  Key
  Performance Indicators

  
	
  2.6

  	
   

  	
  Monthly
  Reports

  
	
  3.3

  	
   

  	
  Volume
  Plan

  
	
  4.2(a)

  	
   

  	
  Schedule of
  Rates

  
	
  4.3

  	
   

  	
  Change
  Control Operating Procedure

  
	
  4.10(c)

  	
   

  	
  Health,
  Safety and Environment Guidelines

  
	
  10.1(i)

  	
   

  	
  Security
  Policy

  
	
  12.1

  	
   

  	
  Required
  Insurance Coverages

  

 

EXHIBITS AND SCHEDULES
THERETO

 

	
  EXHIBIT
  A

  	
   

  	
  Specific
  Product Supplement No. 1

  
	
  2.1
  (No. 1)

  	
   

  	
  Products,
  Markets, Regulatory Acts and Authorities

  
	
  3.1
  (No. 1)

  	
   

  	
  Product
  Prices

  
	
  3.8
  (No. 1)

  	
   

  	
  Shelf
  Life Variances

  
	
  4.1
  (No. 1)

  	
   

  	
  Specifications

  
	
  4.7
  (No. 1)

  	
   

  	
  Long
  Lead Time Materials

  
	
  4.9
  (No. 1)

  	
   

  	
  Technical
  Terms of Supply

  
	
  5.5
  (No. 1)

  	
   

  	
  Permitted
  Delivery Variance Parameters

  
	
  10.1
  (d) (No. 1)

  	
   

  	
  Outstanding
  Regulatory Consents

  
	
  17.8
  (No. 1)

  	
   

  	
  Approved
  Subcontractor Services

  

 

v

 

SUPPLY AGREEMENT

 

THIS SUPPLY AGREEMENT (the “Agreement”) is entered
in Ontario, Canada on December 18, 2001 (the “Effective Date”) by and
between GLAXOSMITHKLINE INC., a corporation organized under the laws of Canada
(“GSK”) and DRAXIS PHARMA, INC., a corporation organized under the laws of
Canada (“Draxis”).  GSK and Draxis are
sometimes referred to herein individually as a “Party” and collectively as “Parties.”

 

RECITALS

 

WHEREAS, GSK is a pharmaceutical company engaged in
the discovery, development, manufacture and sale of pharmaceuticals;

 

WHEREAS, Draxis is a company that has developed
substantial expertise in manufacturing pharmaceutical products;

 

WHEREAS, on January 31, 1997, GSK and Draxis entered
into a Supply Agreement pursuant to which Draxis currently manufactures certain
pharmaceutical products for GSK for distribution in defined geographical areas;

 

WHEREAS, on May 25, 2001, GSK and Draxis
entered into a Technical Transfer Agreement pursuant to which GSK is
transferring to Draxis the technology required by Draxis to manufacture
additional products for GSK; and

 

WHEREAS, the Parties desire to enter into a new
Supply Agreement pursuant to which Draxis will continue to manufacture existing
products and begin to manufacture additional products for GSK, including
additional products to be identified after the Effective Date pursuant to Section 2.1
hereto.

 

NOW, THEREFORE, in consideration of the foregoing
recitals, mutual covenants, agreements, representations and warranties
contained herein, the Parties hereby agree as follows:

 

Article I

Definitions

 

“Affiliate” shall mean any person or entity that,
directly or indirectly, through one or more intermediaries, Owns, is Owned by
or is under common Ownership with, a Party, where “Own,” “Owned” or “Ownership”
refers to (i) direct or indirect possession of at least fifty percent
(50%) of the outstanding voting securities of a corporation or a comparable
ownership in any other type of entity; or (ii) the actual ability of an
entity, person or group to control and direct the management of the person or
entity, whether by contract or otherwise.

 

“Annual Product Review” shall have the meaning
provided in Section 5.14 of this Agreement.

 

 

“Certificate of Analysis” shall mean a document
identified as such and provided by Draxis to GSK that (i) sets forth the
analytical test results for a specified lot of Products shipped to GSK
hereunder, (ii) is in conformance with each applicable Drug Application
and (iii) states whether such Products are manufactured in accordance with
the Specifications and cGMPs.

 

“Certificate of Conformance” shall mean a document
identified as such and provided by Draxis to GSK that states that the specified
lot of Products shipped to GSK hereunder are manufactured in accordance with
the Specifications and cGMPs.

 

“Certificate of Manufacture” shall mean a document
identified as such and provided by Draxis to GSK which attests that a specific
lot of Products has been produced in accordance with the Specifications.

 

“Change Control Operating Procedure” shall have the
meaning provided in Section 4.3 of this Agreement.

 

“Consent” shall mean any consent, authorization,
permit, certificate, license or approval of, exemption by, or filing or registration
with, any Governmental Body or other person.

 

“Current Good Manufacturing Practices” or “cGMPs”
shall mean all applicable standards relating to manufacturing practices for
fine chemicals, intermediates, bulk products or finished pharmaceutical products
(i) promulgated by any Governmental Body having jurisdiction over the
manufacture of the Products, in the form of laws or regulations, (ii) promulgated
by any Governmental Body having jurisdiction over the manufacture of the
Products, in the form of guidance documents (including but not limited to
advisory opinions, compliance policy guides and guidelines) which guidance
documents are being implemented within the pharmaceutical manufacturing
industry for such products or (iii) which Draxis knows or reasonably
should have known to be current and shown to be feasible on a commercially
reasonable basis and valuable in ensuring drug quality within the
pharmaceutical manufacturing industry for such products, in each case as in
effect at the Effective Date and as amended, promulgated or accepted from time
to time during the term of this Agreement.

 

“Data” shall have the meaning provided in Section 7.5(a) of
this Agreement.

 

“Days” (whether or not the word is capitalized)
shall mean, except where specified otherwise, calendar days.

 

“Delivery Date” shall mean the date specified by GSK
that Draxis shall make the Products available for shipment out of the Facility
in accordance with this Agreement.

 

“Directly Competing Products” shall have the meaning
provided in Section 16.1 of this Agreement.

 

“Draxis Developments” shall have the meaning
provided in Section 7.2(d) of this Agreement.

 

2

 

“Draxis Intellectual Property” shall mean (i) all Intellectual
Property owned by Draxis prior to the Effective Date and (ii) all
Intellectual Property developed by Draxis independent of Draxis’ performance of
its obligations under this Agreement; provided, however, that such Intellectual
Property does not relate to the Products, or utilizes or is based on any GSK
Intellectual Property.

 

“Draxis Material Default” shall have the meaning
provided in Section 15.2 of this Agreement.

 

“Drug Application” shall mean any New Drug Submission or any
Abbreviated New Drug Submission filed with the appropriate division of Health
Canada, and its successor, or any product license or any equivalent drug
application or similar pharmaceutical product approval administered by any
other Governmental Body, or extension or renewal of any of the foregoing.

 

“Eligible Annual Margin” shall have the meaning
provided in Section 3.3(a) of this Agreement.

 

“Facility” shall mean Draxis’ manufacturing facility
located at Montreal, 16751 Route Transcanadienne, Trans-Canada Road, Kirkland,
Quebec, Canada H9H 4J4.

 

“Firm Zone” shall have the meaning provided
in Section 2.2(b) of this Agreement. 

 

“Force Majeure Event” shall have the meaning
provided in Article XIV.

 

“Governmental Body” shall mean any nation or
government, any state, province, or other political subdivision thereof or any
entity with legal authority to exercise executive, legislative, judicial,
regulatory or administrative functions or pertaining to government in a country
set forth on Schedule 2.1 to the applicable Specific Product
Supplement, as each such Schedule(s) may be amended by GSK pursuant to this
Agreement; provided, however, that the addition of new products shall be added
on terms mutually agreed to by the Parties.

 

“GSK Group Quality Policies” shall mean those
policies and procedures titled as such and developed by GSK or GSK Affiliates
to assure mandatory controls within production sites, as currently in effect
and as amended from time to time, or any successor policies and procedures
designated by GSK.

 

“GSK Intellectual Property” shall mean any and all
Intellectual Property relating to the Products or their manufacture by Draxis
that was (i) owned by GSK or GSK Affiliates at the Effective Date, (ii) developed
or acquired by GSK or GSK Affiliates after the Effective Date, or (iii) developed
by Draxis since the Effective Date.

 

“GSK Material Default” shall have the meaning
provided in Section 15.5 of this Agreement.

 

“GSK Rights” shall have the meaning provided in Section 7.3(a) of
this Agreement.

 

3

 

“Health, Safety and Environmental Guidelines” shall
have the meaning provided in Section 4.10(c) of this Agreement.

 

“Indemnified Party” shall have the meaning provided
in Section 11.3 of this Agreement. 

 

“Indemnifying Party” shall have the meaning provided
in Section 11.3 of this Agreement.

 

“Industry Price Index” shall mean the Consumer Price
Index for Canada (P11950) as published by the Bank of Canada, or a successor
agency, or if this index ceases to be published, the factor provided by any other
comparable guide as agreed to by the Parties.

 

“Intellectual Property” shall mean (i) trademarks,
trademark registrations, trademark applications, service marks, service mark
registrations, service mark applications, business marks, brand names, trade names,
trade dress, names, logos and slogans and all goodwill associated therewith; (ii) patents,
patent rights, provisional patent applications, patent applications, designs,
registered designs, registered design applications, industrial designs,
industrial design applications and industrial design registrations, including
any and all divisions, continuations, continuations-in-part, extensions,
substitutions, renewals, registrations, revalidations, reexaminations, reissues
or additions, including supplementary certificates of protection, of or to any
of the foregoing items; (iii) copyrights, copyright registrations,
copyright applications, original works of authorship fixed in any tangible
medium of expression, including literary works (including all forms and types
of computer software, including all source code, object code, firmware,
development tools, files, records and data, and all documentation related to
any of the foregoing), musical, dramatic, pictorial, graphic and sculptured
works; (iv) trade secrets, technology, discoveries and improvements,
know-how, proprietary rights, formulae, confidential and proprietary
information, technical information, techniques, inventions, designs, drawings,
procedures, processes, models, formulations, manuals and systems, whether or
not patentable or copyrightable, including all biological, chemical,
biochemical, toxicological, pharmacological and metabolic material and
information and data relating thereto and formulation, clinical, analytical and
stability information and data which have actual or potential commercial value
and are not available in the public domain; and (v) all other intellectual
property or proprietary rights, in each case whether or not subject to
statutory registration or protection.

 

“Key Concern” shall have the meaning provided in Section 15.8(b) of
this Agreement.

 

“Key Performance Indicators” shall have the meaning
provided in Section 2.5 of this Agreement.

 

“Legal Requirements” shall mean any and all
applicable local, municipal, provincial, federal and international laws,
statutes, ordinances, rules, regulations or operating procedures now or
hereafter enacted or promulgated by any Governmental Body, including the
Regulatory Acts.

 

“Long Lead Time Materials” shall have the meaning
provided in Section 4.7(a) of this Agreement.

 

4

 

“Losses” shall mean, collectively, any and all
claims, liabilities, damages, costs, expenses, including reasonable fees and
disbursements of counsel (except as herein limited) and any consultants or
experts and expenses of investigation, obligations, liens, assessments,
judgments, fines and penalties imposed upon or incurred by an Indemnified
Party.

 

“Marks” shall have the meaning provided in Section 7.l(c) of
this Agreement.

 

“Materials” shall mean (i) all raw materials,
components and other ingredients required to manufacture the Products and (ii) all
packaging materials used in the manufacture, storage and shipment of Products.

 

“Materials Certification” shall have the meaning
provided in Section 4.6(d) of this Agreement.

 

“Materials Cost” shall have the meaning provided in Section 3.2(a) of
this Agreement. 

 

“Materials Zone” shall have the meaning provided in Section 2.2(c) of
this Agreement.

 

“New Products” shall mean the products designated as
such on Schedule 2.1 to the applicable Specific Product Supplement.

 

“Nonconformity” shall have the meaning provided in Section 5.4(b) of
this Agreement. 

 

“Obsolete Materials” shall have the meaning provided
in Section 4.8(c) of this Agreement. 

 

“Other Costs” shall have the meaning provided in Section 3.2(a) of
this Agreement. 

 

“Other Draxis Default” shall have the meaning
provided in Section 15.3 of this Agreement. 

 

“Other GSK Default” shall have the meaning provided
in Section 15.6 of this Agreement. 

 

“Partial Batch Orders” shall have the meaning
provided in Section 2.3(b) of this Agreement.

 

“Party” and “Parties” shall have the meanings given
such terms, respectively, in the first paragraph of this Agreement.

 

“Patents” shall mean (i) United States or
Canadian issued patents, re-examinations, reissues, renewals, extensions patent
term restorations, and foreign counterparts of each of the foregoing; and (ii) pending
applications for United States or Canadian patents and foreign counterparts
thereof, whether issued or not.

 

“Period of Restriction” shall have the meaning
provided in Section 16.2 of this Agreement.

 

“Person” shall mean any individual or corporation,
company, partnership, trust, incorporated or unincorporated association, joint
venture or other entity of any kind.

 

5

 

“Potential Contaminants” shall have the meaning
provided in Section 4.11 of this Agreement.

 

“Product Developments” shall have the meaning
provided in Section 7.2(a) of this Agreement.

 

“Product Discontinuance” shall have the meaning
provided in Section 2.9 of this Agreement.

 

“Product Price” shall have the meaning provided in Section 3.1
of this Agreement.

 

“Products” shall mean all those pharmaceutical products
produced for those specific markets all as set forth on Schedule 2.1
to the applicable Specific Product Supplement.

 

“Prohibited Markets” shall have the meaning provided
in Section 16.3 of this Agreement.

 

“Proposed Change in Control Transaction” shall have
the meaning provided in Section 15.9 of this Agreement.

 

“Regulatory Acts” shall mean, as applicable, the
Canadian Food and Drug Act, as amended, the rules and regulations
thereunder, and any applicable laws and regulations governing the approval,
manufacture, sale or licensing of pharmaceutical products or ingredients for
inclusion therein of any other jurisdiction named on Schedule 2.1
to the applicable Specific Product Supplement, as each such Schedule is
amended from time to time, for which Draxis is then producing Products.

 

“Regulatory Authorities” shall mean any division of
Health Canada and its successor, the Food and Drug Administration (as
applicable) and any other applicable counterpart agency that administers the
Regulatory Acts of any jurisdiction other than Canada named on Schedule 2.1
to the applicable Specific Product Supplement, as each such Schedule is
amended from time to time.

 

“Reimbursable Materials” shall have the meaning
provided in Section 4.8(b) of this Agreement.

 

“Selected Accounting Firm” shall mean any national
independent accounting firm selected from time to time by the joint consent of
the Parties.

 

“Specifications” shall mean, with respect to any
Product, all specifications for materials, approved suppliers, formula,
manufacturing, analytical and testing procedures, release, packaging, labeling,
artwork and other processes contained in any documents relating to Products as
identified on Schedule 4.1 to the applicable Specific Product
Supplement and incorporated herein by reference, including all master formulas,
process flow diagrams and all packaging and filling work orders as may be
revised from time to time in accordance with this Agreement.

 

“Specific Product Supplement” shall have the meaning
set forth in Section 2.1 of this Agreement.

 

6

 

“Technical Terms of Supply” shall have the meaning
provided in Section 4.9 of this Agreement.

 

“Technical Transfer Agreement” shall mean that
certain Technical Transfer Agreement by and between GSK and Draxis and dated May 25,
2001.

 

“Term” shall have the meaning provided in Section 15.1
of this Agreement.

 

“Third Party” shall mean any person or entity other
than the Parties or their respective Affiliates.

 

Article II

Sale And Purchase Of Product

 

2.1                                  General.

 

(a)                                   Specific Product Supplement.  From
time to time, the parties shall adopt, by mutual agreement, one or more
Specific Product Supplement(s) (each, a “Specific Product Supplement”) issued
under this Agreement which shall identify pharmaceutical products to be
supplied by Draxis to GSK under this Agreement, the applicable Product Price,
and such other terms of supply as set forth in this Agreement and in that
Specific Product Supplement.  Each
Specific Product Supplement shall be effective only when executed by the
Parties and shall be attached as an exhibit to this Agreement and shall be
incorporated herein by reference and be part of this Agreement.

 

(b)                                  Manufacture of Product. 
Subject to the terms and conditions of this Agreement, including,
without limitation, the applicable Specific Product Supplement, Draxis agrees
to manufacture the Products at the Facility for sale to GSK and GSK Affiliates.
 Draxis may manufacture Products at
locations other than the Facility only with the prior written consent of GSK.  Draxis shall have only the authority provided
under this Agreement with respect to the manufacture, testing, packaging,
storing, labeling, release, delivery or sale of Products, and Draxis shall in
no manner otherwise deal with the Products.

 

2.2                                  Monthly Forecasts.

 

***

 

7

 

***

 

2.3                                   Purchase Orders.

 

(a)                                     General.  GSK shall deliver to Draxis
purchase orders (“Purchase Orders”) for the aggregate Product volumes in each
Firm Zone.  Each Purchase Order shall
specify the volumes of Products ordered, the Delivery Date and the destination
for delivery of the Products by the carrier or freight forwarder.  The Purchase Orders may be delivered electronically
or by other means to such location as Draxis shall designate.  Draxis shall be obligated to make such
Products available on a date within three (3) days prior to the Delivery
Date specified by GSK.  In the event that
Draxis shall not be able to make Products available by the Delivery Date
specified in a Purchase Order, Draxis shall notify GSK promptly upon discovery
of its inability to comply with the terms of this Section 2.3.  In addition, Draxis will take such actions as
may be reasonably requested by GSK to minimize the damage to GSK caused by
Draxis’ inability to meet this shipping schedule.  Except as provided in Section 2.4 below,
all Purchase Orders shall be binding on Draxis.  GSK shall issue Purchase Orders to Draxis not
less than ninety (90) business days prior to the earliest requested Delivery
Date for any Products to be shipped pursuant to such Purchase Order.

 

(b)                                    Partial Batch Orders.  In
the event that GSK delivers Purchase Orders to Draxis for the aggregate Product
volumes in any Firm Zone, which such volumes are less than a full manufacturing
lot (each, a “Partial Batch Order”), GSK and Draxis will work in good faith to
develop a mutually agreed upon schedule for bundling such Partial Batch Orders
so that the aggregate Product volumes of those Partial Batch Orders are equal
to a full manufacturing lot.  Notwithstanding
the preceding sentence, if GSK, in its sole discretion, requires that Products
be delivered pursuant to the terms of one or more Partial Batch Orders, such
Partial Batch Orders shall be binding on Draxis even if the aggregate Product
volumes of those Partial Batch Orders are less than a full manufacturing lot.  In this event, Draxis shall use its reasonable
commercial efforts to minimize the portion of the applicable manufacturing lot
that is not sold to GSK or to a Divestment Party within six (6) months of
the date of the applicable Partial Batch Order(s).  If any portion of such a manufacturing lot is
not sold ***

 

8

               ***

 

2.4                                 Accommodations.  From
time to time, due to significant unforeseen circumstances, GSK may deliver to
Draxis a Purchase Order for Product volumes in excess of those specified in any
Firm Zone.  ***

 

2.5                                 Key Performance Indicators.  GSK
and Draxis will use Key Performance Indicators to evaluate Draxis’ performance
of its obligations under this Agreement.  The Key Performance Indicators will be set
forth on Schedule 2.5 to this Agreement.  This Schedule 2.5 will be
developed jointly, and mutually agreed to, by GSK and Draxis within ninety (90)
days of the execution of this Agreement and shall be promptly thereafter
attached hereto.  In the event that the
Parties are not able to mutually upon the Key Performance Indicators within
this time period, either Party may refer this matter, by giving notice to the
other Party, to Draxis’ President and GSK’s Senior Vice President, North
American Supply Network, for resolution.  These officers, or their designees, shall meet
to develop a mutually agreed upon set of Key Performance Indicators, which such
Key Performance Indicators shall be promptly thereafter attached hereto.  The Key Performance Indicators will reflect
the Parties’ joint understanding as to the standards to be met by Draxis consistent
with the GSK Global Manufacturing and Supply Key Performance Indicators.  Draxis will use reasonable commercial efforts
to achieve to these measures.

 

2.6                                 Meetings and Reports.  Unless
otherwise mutually agreed, the Parties shall meet no less than monthly to
discuss the forecasts delivered by GSK pursuant to this Agreement, the Key Performance
Indicators (as described in Section 2.5 above) and other matters relevant
to the supply of Products hereunder (each such meeting hereinafter referred to
as the “Monthly Meeting”).  At least two (2) business
days prior to each Monthly Meeting, GSK and Draxis shall deliver to personnel
designated by the receiving party certain reports.  The reports to be delivered pursuant to this Section 2.6
will be set forth on Schedule 2.6 to this Agreement, which Schedule will
be developed jointly, and mutually agreed to, by GSK and Draxis within ninety
(90) days of the execution of this Agreement and shall be promptly thereafter
attached thereto.  The reports shall each
be in a form mutually agreed by the Parties.  The Parties shall also meet annually to
discuss strategies for improving the processes related to the manufacture of
the Products, to report other developments in the GSK global supply chain and,
without relieving any party of or amending any

 

9

 

obligations under this Agreement, to designate additional persons for
communications relating to the performance of this Agreement (each such meeting
hereinafter referred to as the “Annual Meeting”).  GSK shall attempt, in good faith, to provide
to Draxis at the Monthly Meetings and the Annual Meetings all other readily
available, appropriate data relating to the Products or GSK’s prospective
demands and trends for the Products, including, without limitation, as soon as
is reasonably practicable, the details of Products that have Long Lead Time
Materials.

 

2.7                                   Long-Term Forecasts.  ***

 

2.8                                   Global Supply Chain.  The
Parties recognize that Draxis is intended to function as a part of the GSK
global supply chain.  From time to time,
GSK may require its global supply chain affiliates to implement information
technology systems enabling improved EDI (Electronic Data Interchange).  The Parties agree that systems required of the
global supply chain will be adopted by Draxis at GSK’s expense.  Draxis shall use its reasonable commercial
efforts to implement those systems on the timetable requested by GSK, unless
GSK otherwise agrees pursuant to this Section 2.8.  Draxis shall provide GSK with its estimate of
the costs attributable to any proposed implementation as soon as reasonably
practicable following a request by GSK.  Within
a reasonable time after receipt of Draxis’ estimate, GSK and Draxis shall agree
on the amount, timing and any milestones for all Product payments to be made by
GSK and on all information and levels of technical or other assistance to be
provided by GSK in the implementation of those systems at the Facility.  GSK and Draxis hereby recognize that in the
future it may be advantageous to implement a VMI (Vendor Managed Inventory) system
for the supply of the Products.  In that
event, the Parties agree to discuss in good faith the possibility of
implementing such a VMI System subject to mutual agreement on relevant terms,
conditions and costs.

 

2.9                                   Product Discontinuance.  GSK
may give Draxis written notice at any time that it intends to discontinue
manufacture of a particular Product (each, a “Product Discontinuance”).  Unless GSK and Draxis agree otherwise, Draxis
shall complete the manufacture of the Products subject to the Product
Discontinuance as necessary to supply the volumes specified in the Firm Zone in
effect at the time of notice of that Product’s Discontinuance and such other
volumes as the Parties shall mutually agree.

 

10

 

Article III

Prices For Products;
Shipment; Payments

 

3.1                                 Price.  ***

 

3.2                                 Annual Price Adjustments.

 

                                ***

 

11

 

3.3                                   Annual Volume Discount Credits; Adjustment
Fees.

 

                                ***

 

3.4                                  Creditable Deposit.  ***

 

3.5                                  Invoices.  ***

 

 

 

12

 

3.6                                 Payment.  ***

 

3.7                                 Payment Denominations.  ***

 

3.8                                 Shipment; Title; Transport.

 

***

 

 

 

13

 

                                ***

 

3.9                                 Records.  Draxis will keep accurate
books and accounts of record in connection with the manufacture, use and/or
sale by it of Products hereunder in sufficient detail to permit accurate determination
of all figures necessary for verification of payment obligations set forth in
this Article III.  Such records
shall be maintained for a period of seven (7) years (or for a particular
year upon notice from GSK prior to the end of such seven (7) year period,
six (6) years) from the end of each year to which it relates, unless
required by GSK to be maintained for a longer period.  GSK, at its expense, through a certified
accountant, whether a GSK employee or an independent contractor, shall have the
right to access such books and records for the sole purpose of verifying the
reports regarding the amounts due; such access shall be conducted after
reasonable prior notice by GSK during Draxis’ normal business hours and shall
not be more frequent than once during each calendar year.

 

3.10                           Taxes.

 

***

 

 

 

14

 

                ***

 

3.11                           New Presentations.

 

(a)                                  New Presentations.  From
time to time, GSK may request Draxis to manufacture any of the Products in any
package size or dosage size or for shipment into a country not set forth on the
applicable Schedule 2.1 (each, a “New Presentation”).  Subject to compliance with the provisions of Section 4.3
and Section 3.11(c) of this Agreement, Draxis shall manufacture New
Presentations and the Parties shall negotiate in good faith to establish a
timeline for commencing manufacture of any New Presentations at the Facility and
a price for the New Presentation.

 

(b)                                 Model Pricing Formula.  ***

 

 

 

15

 

                                ***

 

(c)           Alternative
Pricing Mechanism.  If either Party
finds that with respect to any particular New Presentation the formulas set
forth in Section 3.1 l (b) above will not result in an appropriate
Product Price for any reason (including, without limitation, the requirement of
an extended period of time for the recoupment of capital expenditures), that
Party shall notify the other Party in writing and propose an alternative
Product Price and the method used to determine the appropriate Product Price
for the New Presentation at issue.  The
Parties shall then negotiate in good faith regarding the Product Price for the
New Presentation; provided, however, if the Parties are unable to agree on the
Product Price for the New Presentation, then Draxis shall not be obligated to
manufacture such New Presentation.

 

Article IV

Manufacture Of Product

 

4.1                                 Specifications. 
Draxis shall manufacture, test, package, store, label, release and deliver
all Products in accordance with the Specifications, cGMPs, GSK Group Quality
Policies, and the Technical Terms of Supply as described in Section 4.9
below.  Draxis shall produce Products
conforming to the Specifications as set forth on Schedule 4.1 to
the applicable Specific Product Supplement, as those Specifications are revised
from time to time in accordance with the provisions of this Agreement
including, without limitation, Section 4.2 below.

 

4.2                                 Specification Changes.

 

(a)                                  GSK Requested Changes.  GSK
shall be entitled to change the Specifications for a Product from time to time,
and Draxis shall make all revisions to the Specifications requested by GSK, in
accordance with the Change Control Operating Procedures set forth on Schedule 4.3
to this Agreement.  GSK retains the right
and responsibility for final approval of the Specifications for the Products.  Except to the extent provided in Section 4.2(c)(ii) or
Section 4.2(d) below, GSK shall pay Draxis the amounts incurred in
implementing a change to the Specifications requested by GSK under this Section 4.2(a),
as determined in accordance with the Change Control Operating Procedures and
the Schedule of Rates set forth on Schedule 4.2(a) to
this Agreement.  Schedule 4.2
shall be developed jointly, and mutually agreed to, by GSK and Draxis within
ninety (90) days of the execution of this Agreement and shall be promptly
thereafter attached hereto.  For all
changes to the Specifications requested by GSK pursuant to this Section 4.2(a),
GSK shall, in its discretion, either (i) perform, or arrange for the
performance of, all development work in connection therewith or (ii) have
Draxis perform such development work at the Facility.  GSK shall reimburse Draxis for its actual
costs incurred with GSK’s prior approval in implementing a change to the
Specifications requested by GSK under this Section 4.2(a); and Draxis must
provide such documentation of its costs as may be reasonably requested by GSK.  Draxis agrees to use commercially reasonable
efforts to minimize its costs associated

 

16

 

with any Specification change.  At the request of GSK, Draxis shall evaluate
the estimated costs and timing of potential revisions to the Specifications.

 

(b)                                 Draxis Changes.  With
the exception of compendial changes (i.e., USP/EP/BP).  Draxis shall not make any revisions to the
Specifications without prior written consent of GSK in accordance with the
Change Control Operating Procedure.  GSK retains
the right and responsibility for final approval of the Specifications for
Products.  All requests by Draxis for
such revisions shall be submitted in writing to GSK on the forms included in
the Change Control Operating Procedure.  Draxis
shall notify GSK, in writing and in reasonable detail, of (i) Draxis’
suggested change; (ii) the reasons for the suggested change; (iii) the
perceived benefits of the suggested change to Draxis and GSK, respectively; and
(iv) the estimated costs and timing of implementing such change.  If the Parties implement a change in the
Specifications hereunder, they shall negotiate any changes in any affected
Purchase Order to provide reasonable accommodation for changed circumstances.  Draxis shall be responsible for documenting
all revisions to the Specifications, subject to GSK’s approval, in accordance
with the Change Control Operating Procedure, as applicable.

 

(c)                                  Payment for Certain Changes. 
Either Party may request a Specifications change intended to maintain
high standards or compliance with Regulatory Acts and Legal Requirements or to
bring the Specifications into compliance with high standards or Regulatory Acts
and Legal Requirements.  Subject to Section 4.2(d),
payment for changes required for compliance with Regulatory Acts or Legal
Requirements will be made per the following standards:

 

(i)                                     Subject to (iii) below, the costs of
revisions requested by either Party in order to maintain the Specifications in
conformity with that Product’s Drug Application, applicable cGMPs, applicable
Regulatory Acts or Legal Requirements (including with respect to any of the
materials used in that Product), and not to the manufacture of pharmaceutical
products or types of dosage forms (e.g., sterile vials or blister packs)
generally, shall be borne by GSK.

 

(ii)                                  Subject to (iii) below, the costs of
revisions (including any capital expenditure incurred to implement any
revision, costs of additional materials and one-time expenditures) requested by
either Party to maintain the Specifications in conformity with cGMPs, laws
Regulatory Acts or Legal Requirements applicable to the manufacture of
pharmaceutical products or applicable dosage form (e.g., sterile vials or
tablets in blister packs), shall be borne by Draxis without any increase in the
price of that Product if subsequently sold to GSK; provided, however, that the
costs related to information technology systems enabling improved EDI, shall be
borne by GSK.

 

(iii)                               Notwithstanding the individual financial
obligations in (i) and (ii) above, if at any time during the Term of
the Agreements, GSK interprets and applies cGMPs in a manner that is materially
more burdensome to Draxis than the

 

17

 

interpretation and application followed by Draxis’
other pharmaceutical customers, then the Parties will negotiate in good faith
to settle the proportion of the incremental cost to be borne by each of the
Parties to implement GSK’s interpretation and application of cGMPs.

 

(d)                                 Changes in Labeling and Packaging.  From
time to time GSK may require labeling or packaging changes that will affect the
Products.  These changes may either be
initiated by GSK, pursuant to Section 4.2(a) above, or may be a
requirement resulting from cGMPs changes.  In either event, if the labeling or packaging
change affects all or substantially all of the Products, notwithstanding Section 4.2(c) above,
GSK will reimburse Draxis for its costs associated with such a change according
to the Schedule of Rates set forth on Schedule 4.2(a).  In the event the labeling or packaging change
does not affect all or substantially all of the Products, Draxis shall bear the
costs associated with such a change.

 

4.3                                   Change Control Operating Procedure.

 

(a)                                  General.  The Change Control Operating
Procedure set forth in Schedule 4.3 to this Agreement shall
establish the procedure to be followed in the event either GSK or Draxis
desires to change any aspect of the manufacturing procedure for Products described
in such Change Control Operating Procedure, including but not limited to any
change in Specifications as described in Section 4.2(a) above.  Neither party shall implement any change in
the manufacturing procedure for the Products unless it has complied with the Change
Control Operating Procedure, to the extent required.

 

(b)                                 Amendment of Change Control Procedure.  Schedule 4.3
may be modified in accordance with Section 17.9 of this Agreement.  In addition, Schedule 4.3 shall be
modified to reflect GSK’s Change Control Operating Procedure for contract
manufacturers as in effect from time to time, and Draxis agrees to execute any
and all documents required under Section 17.9 of this Agreement to amend Schedule 4.3
in that event.  Any change under the Change
Control Operating Procedure shall be completed under the Change Control Operating
Procedure in effect when the request for change was commenced.

 

(c)                                  Governmental Approval.  The
Change Control Operating Procedure shall contain a mechanism to assure that all
required regulatory filings are made, and applicable Governmental Bodies have
approved any changes to the Specifications, to the extent required, and that
Draxis has a reasonable time to implement any changes in the Specifications
required by any Governmental Authority.

 

4.4                                 Storage Obligations.  When
storing Products or Product-derived wastes, Draxis shall comply with, and shall
maintain all storage facilities in compliance with, the Specifications and in accordance
with cGMPs, GSK Group Quality Policies and Legal Requirements.

 

18

 

4.5                                 Validations and Stability Studies.

 

(a)                                    General.  Subject to initial validation
and stability costs related to the Product transfers referenced in Article IV
of the Technical Transfer Agreement, Draxis shall perform at no additional cost
to GSK on an on-going basis all validations and stability studies required by
the Specifications, cGMPs, GSK Group Quality Policies or Legal Requirements in
connection with the regular course of manufacturing the Products for commercial
supply.  Draxis shall also perform
commercial validations and stability studies otherwise required for the
performance of its obligations under this Agreement at no additional cost to
GSK except in those instances under this Agreement that require GSK to compensate
Draxis for such services (e.g., changes to Specifications for which GSK bears the
costs).

 

(b)                                   Duties.  In performing its duties under
Section 4.5(a) above, Draxis shall perform the following tasks:

 

(i)                                        prepare and provide to GSK, in the format
designated by GSK, the data package for required regulatory submissions;

 

(ii)                                     pull, store and analyze data and maintain
database containing applicable information;

 

(iii)                                  notify the GSK Canada Director for Quality
Assurance, or his designee, promptly, but not less than within three (3) business
days, if any batch of Products fails any stability tests; and

 

(iv)                                 report to the GSK Canada Director for Quality
Assurance, or his designee, promptly, but not less than within three (3) business
days, any significant atypical results, deviations or adverse trends exhibited
during testing.

 

(c)                                    Reference Standards.  GSK
shall provide, without charge to Draxis, analytical reference standards for
each of the Products.  Draxis will comply
with GSK policies concerning the ordering and use of GSK supplied reference
standards.  Draxis will also create and
maintain a list of products and services undertaken on behalf of GSK using the
reference standards and will provide copies to GSK on request.  The reference standards shall be provided in
quantities reasonably required for Draxis to perform its obligations relating
to the manufacture, stability or other testing, or any other obligation under
this Agreement.  GSK will provide
reasonable technical assistance to enable Draxis to supply and maintain their
own reference standards for Divested Products once GSK is no longer obligated
to supply those Products to the Divestment Parties, subject to the terms and conditions
of the applicable agreement between GSK and the Divestment Party.  Draxis will not supply reference standards
directly to any third party company, including any Divestment Party.

 

19

 

4.6                                   Materials.

 

(a)                                    General.  Draxis will obtain Materials
for Products produced under this Agreement only from suppliers named in the
Specifications, where applicable, and shall perform all testing of Materials
required by the applicable Materials Specifications.  Draxis will use its best efforts to obtain the
lowest possible prices for Materials consistent with its obligations under this
Agreement.

 

(b)                                   Periodic Audits. 
Draxis shall be responsible for performing periodic audits of each
supplier that provides Materials to be used in the manufacture of the Products
as required by cGMPs and GSK Group Quality Policies.  To the extent that Draxis has not previously
conducted an audit of a supplier, GSK will share its audit results, if any,
with Draxis and Draxis agrees to assume responsibility for future audits of
such Supplier.

 

(c)                                    Inventory.  Draxis shall manage its
inventory of Materials to enable Draxis to produce the Product Volumes
specified in a Firm Zone and up to an additional twenty percent (20%) of such
Product volumes as provided in Section 2.4 above.  Subject to this obligation, Draxis shall also
manage its inventory to minimize excess carrying costs and any Long Lead Time,
Materials or Reimbursable Materials subject to obsolescence under Section 4.8(c) below.

 

(d)                                   Materials Certifications. 
Draxis shall prepare or cause to be prepared by its suppliers, as the
case may be, all certifications as to any Materials required by cGMPs, GSK Group
Quality Policies, Legal Requirements or Regulatory Acts  (each, a “Materials Certification”).  Such Materials Certifications shall include,
without limitation, all required certifications related to Materials derived
from animal products.

 

(e)                                    Containers and Packaging. 
Draxis shall distribute the Products to GSK in such containers and
packaging and with such container closure systems and labeling as set forth in
the Specifications.  All such containers,
packaging, container closure systems and labeling shall be in compliance with
the Legal Requirements.  All printed
components for the Products shall be produced by Draxis in accordance with the
electronic artwork provided to Draxis by GSK.

 

4.7                                   Long Lead Time Materials.

 

(a)                                     Certain Purchases in Excess of Firm Zone.  Long
Lead Time Materials are those Materials that (i) have lead times in excess
of ninety (90) days, (ii) are used in Products produced exclusively for
GSK and (iii) are listed on Schedule 4.7 to the applicable
Specific Product Supplement.  If Draxis
purchases or enters into commitments to purchase any Long Lead Time Materials
based on the Product volumes in the Materials Zone for a specified month, and
the actual volume specified in the applicable Firm Zone for that specified
month for Products containing such Long Lead Time Materials is less than 70% of
the last Materials Zone volumes for those Products, then Draxis shall
immediately notify GSK of the discrepancy and of its prior purchases or
purchase commitments for Long Lead Time Materials.  Draxis shall take the actions described in Section 4.8(a) below
to minimize its quantities of unusable Long Lead Time Materials.  ***

 

20

 

***

 

(b)                                  Insufficient Quantities of Long Lead Time
Materials.  ***  Draxis’
inability to provide the Product volumes specified in the Firm Zone due to
insufficient inventories of Long Lead Time Materials resulting from the changes
in the GSK forecast as specified in this Section 4.7(b) shall not
constitute a Draxis Material Default to the extent that Draxis has complied
with its obligations under this Section 4.7(b).

 

4.8                                  Reimbursement for Certain Materials.

 

(a)                                     General.  ***

 

(b)                                    Reimbursable Materials.  ***

 

 

 

21

 

***

 

(c)                                  Obsolete Materials.  ***

 

(d)                                   Obsolete Materials Reimbursement.  ***

 

4.9                                   Technical Terms of Supply.  The
Technical Terms of Supply for the Products are set forth as Schedule 4.9
to the applicable Specific Product Supplement.  In the event of a conflict

 

22

 

between
the terms of any Technical Terms of Supply attached to a Specific Product
Supplement and the terms of this Agreement, the terms of this Agreement shall
control.

 

4.10                             Compliance Standards.

 

(a)                                    GSK Group Quality Policies.  GSK shall provide all relevant GSK Group Quality
Policies to Draxis.  GSK may change the
GSK Group Quality Policies from time to time and shall promptly notify Draxis
of any changes in writing.  Draxis shall
implement any changes in accordance with Section 4.10(b) below
following receipt of notification of changes.  If Draxis believes that any change to the GSK
Group Quality Policies exceed generally accepted industry standard and as a
result will require Draxis to incur significant additional costs not otherwise
contemplated under this Agreement, Draxis shall notify GSK within thirty (30)
days of receipt of the change and the Parties shall negotiate in good faith to
determine the appropriate method for GSK to compensate Draxis for such
additional significant costs.

 

(b)                                   Compliance with cGMPs, GSK Group Quality
Polices, Legal Requirements or Regulatory Acts. 
Draxis shall be responsible for identifying and implementing, in accordance
with its obligations under Section 4.1, any actions required to bring
Draxis into compliance with cGMPs, GSK Group Quality Policies, Legal Requirements
or Regulatory Acts.  In connection with
Draxis’ obligations set forth in the preceding sentence, GSK will provide
Draxis with appropriate guidance and assistance related to GSK Group Quality Policies.
 Draxis shall have the sole
responsibility, however, for reviewing cGMPs, Legal Requirements and Regulatory
Acts in order to identify and implement any actions required for compliance
therewith.  Draxis shall implement any
such changes as promptly as practicable after the changes are adopted (even if,
in the case of cGMPs and Regulatory Acts, if a later effective date is
specified), unless the effective date falls after a termination of this
Agreement for which notice has been previously given.  Draxis shall comply with Legal Requirements of
all countries and nationalities listed on Schedule 2.1 to the applicable
Specific Product Supplement or subsequently identified pursuant to this Agreement,
and Draxis’ obligation shall commence at the time any Product is designated for
shipment into that country or nationality.

 

(c)                                    Compliance with Health, Safety and
Environmental Guidelines.  Draxis shall comply with the health, safety
and environmental guidelines set forth on Schedule 4.10(c) to
this Agreement (the “Healthy, Safety and Environmental Guidelines”).  Draxis is solely responsible for the safety
and health of its employees, consultants and visitors and compliance with all
Legal Requirements and Regulatory Acts related to health, safety and the
environment, including, without limitation, providing its employees,
consultants and visitors with all required information and training concerning
any potential hazards involved in the manufacture, packaging, storage and
supply of the Products and taking any precautionary measures to protect its
employees from any such hazards.

 

4.11                             Certain Prohibitions.  ***

 

23

 

***

 

Article V

Testing And Quality Assurance

 

5.1                                 Quality Assurance; Quality Control. 
Draxis shall implement and perform operating procedures and controls for
sampling, stability and other testing of Materials and Products, and for validation,
documentation and release of the Products and such other quality assurance and
quality control procedures consistent with the Specifications, cGMPs and the
GSK Group Quality Policies.

 

5.2                                 Testing of Product.

 

(a)                                  General.  Prior to release of the
Products to finished goods inventory, Draxis shall test the Products ordered by
GSK in accordance with the testing procedures described in the Specifications,
and shall provide GSK with a Certificate of Manufacture, Certificate of
Analysis, a Certificate of Conformance and/or any other certificate required by
the applicable Regulatory Authorities for release of Product (collectively, the
“Certificates”) for each batch of each of the Products certifying, warranting,
and reflecting that such lot of the Products was produced and tested in
compliance with: (i) the Specifications; (ii) cGMPs; (iii) GSK
Group Quality Policies; and (iv) all other applicable regulatory
documents, in accordance with procedures agreed to between GSK and Draxis, all
as more particularly set forth in the applicable Technical Terms of Supply.  GSK retains the right (but not the obligation)
to test the Products at GSK’s discretion, but generally intends to accept or
reject Products on the basis of the Certificates.  GSK shall be under no obligation to accept any
shipment of Product without the accompanying Certificates.

 

(b)                                 Testing by GSK.  If
GSK reasonably believes that the Certificates are not reliable, based on
repeated irregularity or any significant noncompliance with any of Draxis’  obligations under this Article V of this
Agreement that could reasonably be expected to affect the quality of Products,
then for so long thereafter as GSK may reasonably believe the Certificates are
not reliable, GSK may test any or all Products on the receipt thereof.  For so long as testing is reasonably believed
to be warranted, Draxis shall

 

24

 

reimburse GSK by credit on payments otherwise due
from GSK for any additional testing conducted under this Section 5.2(b).

 

5.3                                 GSK Holds and Rejections.

 

(a)                                  General.  GSK shall notify Draxis of GSK’s
placing any Products on hold for further investigation of a Nonconformity or a
Deviation Report (as described below), or of GSK’s rejection of any batch (or
part thereof) of any Product within sixty (60) days after receipt of such
Products by GSK or GSK’s designee that received such Product.  GSK’s notice shall state the basis for the
hold or rejection.  Failure to give
notice within this sixty (60) day period shall constitute acceptance of any
Product delivered; provided, however, that Draxis shall continue to be liable
for (i) the failure of any Products to conform to Specifications, unless
the failure to conform is due to Force Majeure Event, occurrences affecting or
altering the Products after they are delivered to the carrier or freight
forwarder, actions taken or failed to be taken after the Products were shipped,
(ii) Draxis’ failure to comply with the Specifications, cGMPs and GSK
Group Quality Policies in the manufacture of those Products in accordance with
the provisions of this Agreement, or (iii) the failure of Draxis to comply
with all Legal Requirements and the Regulatory Acts.

 

(b)                                 Independent Testing.  If
the Parties disagree as to whether Products subject to hold or rejected meet
the Specifications, Draxis’ President and GSK’s Head of Quality, Manufacturing
and Strategic Alliances, or such other persons as they may designate in writing,
shall confer to review samples and/or batch records, as appropriate.  If the disagreement is not resolved, then
samples, batch records and other data relating to the batch in dispute shall
promptly be submitted for testing and evaluation to an independent third party
(including a testing laboratory) approved in writing by both Parties.  ***  In
the absence of any agreement, GSK shall have the right, with reasonable
evidence of a Nonconformity (as defined below), to reject any affected
quantities of Products.

 

(c)                                  Notice.  In the event that after the
release of the Products, either Party becomes aware that any batch of the
Products is nonconforming, despite any testing and quality assurance
activities, such Party shall immediately notify the other Party.

 

25

 

5.4                                 Deviation Report; Nonconformity.

 

(a)                                  Deviation Reports.  If
during the manufacture or other handling of a Product by Draxis (i) the
process or analytical limits vary from typical or established report ranges, release
guidelines or release limits, (ii) there is reasonable evidence that
Specifications, cGMPs or GSK Group Quality Polices were not followed in
production of the Products, (iii) there is reasonable evidence that the
Products fail to conform to Specifications, (iv) other events or
conditions occur which could reasonably be expected to adversely affect the
quality of the Products or otherwise are unusual or not expected, or (v) any
physical characteristic or attribute of the Products is recognizable at any
time during the manufacturing process to be unusual, atypical or irregular by a
person with appropriate technical knowledge and experience exercising his best
professional judgment, then Draxis shall prepare as soon as practicable following
the discovery of such deviation a written report detailing such deviation (a “Deviation
Report”) and promptly send such Deviation Report, along with all supporting
documentation, to GSK.  Draxis shall
include in its Deviation Report its analysis and recommendation for Product
disposition.  The Deviation Report shall
be attached to, and shall accompany, copies of all relevant batch records.

 

(b)                                  Nonconformity.  If
either party becomes aware or has a reasonable basis to believe that any batch
or shipment of Products may have a Nonconformity, at any time regardless of the
status of Draxis’ testing and quality assurance activities or of GSK’s acceptance
under Section 5.3 above, such party shall notify the other party within
twenty-four (24) hours of becoming aware of a Nonconformity. “Nonconformity”
means a product characteristic, or potential for existence of product
characteristic, that (i) may reasonably be attributable to Draxis’ failure
to manufacture, test, package, store, label, release or deliver any Product in
accordance with the Specifications, cGMPs or GSK Group Quality Policies, (ii) causes
any Product to fail to conform to the Specifications, or (iii) could
reasonably be expected to lead to a recall or withdrawal of a Product.  In the event of a Nonconformity, the Parties
shall immediately conduct an investigation in accordance with Section 5.8
below and, until resolution of the investigation, handle the Products as
provided in Section 5.4(c) below.

 

(c)                                    Products Subject to Nonconformity or Deviation
Report.  Any batch or shipment of Product that is the
subject of a Nonconformity or of a Deviation Report shall be handled as
follows:

 

(i)                                     Products held in inventory at Draxis shall
not be shipped to GSK or its Affiliates, unless directed otherwise by GSK;

 

(ii)                                  Any Products shipped to GSK and held in stock
by GSK shall maintain a “Hold” or “Unpassed” status, and shall not be released
into passed inventory of GSK, until GSK has completed any investigations
pursuant to Section 5.8 and approved the disposition of the Product
subject to the Nonconformity or the Deviation Report; and

 

(iii)                               Payment for such Products whether shipped or unshipped shall not be due
from GSK until GSK has completed any investigations pursuant to Section 5.8

 

26

 

and approved the disposition of the Product subject to the
Nonconformity or Deviation Report.

 

Upon learning of a Nonconformity, GSK shall have the right to suspend
production of the affected Products at the Facility until the Parties mutually
agree that the cause of such Nonconformity has been remedied or addressed.  During the period of suspended production, GSK
shall be relieved of all financial obligations associated with any Firm Zone or
portion thereof that is not produced as a direct consequence of the suspension,
and Draxis shall be relieved of its potential obligations under Section 15.8(a) for
a period of suspension of up to five (5) business days and (ii) for
any longer period of suspension requested by GSK if Draxis is ultimately found
to have been following applicable Specifications, cGMPs and GSK Group Quality
Policies in the affected Products and the affected Products are found to
conform to cGMPs.

 

5.5                                 Quantitative Deficiencies.  GSK
shall inform Draxis of any claim relating to quantitative deficiencies in any
shipment of Products within forty-five (45) days following receipt of any
shipment.  In the event GSK determines
there is a quantitative deficiency in any shipment, GSK shall, at its option: (i) only
pay for actual quantities delivered; or (ii) require Draxis to rectify any
such deficiency by promptly shipping the appropriate quantities of any relevant
Product to or as directed by GSK or a GSK Affiliate, in which case GSK shall be
obligated to pay for any such quantities pursuant to the terms and conditions
of this Agreement.  Notwithstanding the
foregoing, quantities actually shipped pursuant to a Purchase Order may vary
within the parameters established for each of the Products set forth on Schedule 5.5
to the applicable Specific Product Supplement and still be deemed to be in
compliance with such Purchase Order.

 

5.6                                 Product Complaints.  Any
and all complaints of which Draxis becomes aware relating to any Product shall
promptly be forwarded to the GSK Canada Product Complaints Department, or his
designee.  GSK shall promptly inform
Draxis of any and all complaints that GSK receives which implicate Draxis’
manufacturing or other processes at the Facility.  Notification shall be given by telephone, with
a facsimile confirmation immediately following.

 

5.7                                 Adverse Events.  For
the purposes of this Agreement, “Adverse Event” shall mean any adverse event
associated with the use of any Product in humans, whether or not considered drug-related.
 The definition includes an adverse event
occurring in the course of the use of a Product in professional practice, in
studies, in investigations or in tests.  The
definition also includes an adverse event occurring from Product overdose
(whether accidental or intentional), from Product abuse, or from Product
withdrawal, as well as any toxicity, sensitivity, failure of expected pharmacological
action, or laboratory abnormality which is or is thought by the reporter to be serious
or associated with relevant clinical signs or symptoms.  For the purposes of this Agreement, “Serious
Adverse Event” shall mean an Adverse Event that is fatal, life-threatening,
permanently disabling or incapacitating, results in new or prolonged in-patient
hospitalization, is a congenital anomaly, cancer or an overdose.  With respect to any Product, Draxis shall
notify the GSK Canada Product Complaints Department, or any successor
department specified by GSK, as soon as possible, but (i) no later than
twenty-four (24) hours following its receipt of information concerning a
possible Serious Adverse Event and (ii) no later than forty-eight (48)
hours following its receipt of information of a possible Adverse Event that is
not a Serious Adverse Event.  Notification
shall

 

27

 

be given by telephone, with a facsimile
confirmation immediately following.  Draxis
shall provide to GSK all the information Draxis has available concerning the
Adverse Event and shall cooperate fully with any investigation conducted or directed
by GSK as set forth in Section 5.8 below.  To the extent an Adverse Event of which GSK
becomes aware implicates Draxis’ manufacturing or other processes at the
Facility, GSK shall inform Draxis of such Adverse Event and shall disclose to
Draxis any information GSK has regarding that Adverse Event which implicates
Draxis’ manufacturing or other processes at the Facility.  Notification shall be given by telephone, with
a facsimile confirmation immediately following.

 

5.8                                 Investigations; Draxis’ Obligations.

 

(a)                                  General.  The Parties shall investigate
all reports of Nonconformity, Product complaints and Adverse Events in order to
assure the conformity of Products to Specifications and cGMPs and the safety
and efficacy of the Products.  The
Parties shall act promptly and shall cooperate fully in such investigations.

 

(b)                                 Direction.  GSK shall have the sole right,
in its discretion to control and direct any or all aspects of an investigation
conducted under this Section 5.8.  GSK
shall advise Draxis from time to time throughout such investigation of GSK’s
intentions regarding control and direction of the investigation of which Draxis
has been notified.

 

(c)                                  Draxis’ Assistance.  Upon
written request by GSK, Draxis shall provide all reasonably requested testing,
assistance and information to GSK in connection with an investigation of any
Nonconformity, Product complaint or Adverse Event, including chemical/microbial
analysis of complaint samples  (if
available), analysis of retained samples and review of batch documentation.  Draxis shall have the right to conduct at its own
expense any further tests it deems appropriate regarding such investigation
provided that it shall share the results with GSK.

 

(d)                                 Reporting.  Draxis shall provide to GSK (i) a
written report of its determinations and conclusions from any such
investigation, testing or other requested assistance related to such
investigation as soon as reasonably practicable and (ii) samples (if available)
of the affected Product.  Any report
regarding a Nonconformity shall be submitted by Draxis within thirty days of
the notification regarding that Nonconformity given under Section 5.4(b) above.
 GSK shall provide to Draxis a written
report of GSK’s determinations and conclusions from any investigation, report,
testing, or portions thereof, to the extent GSK’s determination and conclusions
implicate Draxis or Draxis’ manufacturing or other processes at the Facility.  Each party shall hold all communications
related to such investigation, testing or other requested assistance in
confidence, and those communications shall be subject to the terms of Article XIII
hereof.

 

(e)                                  Reimbursement.  ***

 

 

 

28

 

***

 

5.9                                 Certain Product Events.

 

(a)                                  Notification and Cooperation.  In
the event GSK shall be required (or shall voluntarily decide) to initiate a
recall, withdrawal or field correction of, field alert report or comparable
report with respect to, any Product manufactured by Draxis pursuant to this Agreement,
whether or not such recall, withdrawal, field correction or field alert report
has been requested or ordered by any Governmental Body, GSK shall notify Draxis’
most senior quality assurance officer, and Draxis shall fully cooperate with
GSK to implement the same.

 

(b)                                 Coordination of Efforts.  In
the event Draxis believes that a recall, withdrawal, field correction, field
alert report or comparable report with respect to any Product may be necessary
and/or appropriate, Draxis shall immediately notify the GSK Head of Quality,
Manufacturing and Strategic Alliances, of its determination.  The Parties shall cooperate with each other in
determining the necessity and nature of such action; provided, however, that
Draxis shall take no action to effect the same without the written concurrence
of GSK.  If GSK does not concur with any
recall, withdrawal, field correction, field alert report or comparable report
recommended by Draxis, then, without limiting any liability GSK otherwise has
under this Agreement, GSK shall be liable under this Section 5.9(b) for
any Losses incurred by Draxis or GSK that could have been avoided but for the
delay, except to any extent Draxis withheld material information or
misrepresented the material information upon which GSK made its determination.

 

(c)                                  Contacts and Statements.  With
respect to any recall, withdrawal, field correction, field alert report or
comparable report with respect to any Product, GSK shall make all contacts with
the applicable Governmental Authorities and shall be responsible for coordinating
all of the necessary activities in connection with any such recall, withdrawal,
field correction, field alert report or comparable report, and GSK shall make
all statements to the media, including press releases and interviews for
publication or broadcast as provided in Section 13.6 below.  Draxis agrees to make no statement to the
media, unless otherwise required by law and in any such event, Draxis shall
collaborate with GSK on the content of any such statement.

 

(d)                                 Remedies.  If any recall, withdrawal,
field correction, field alert report or comparable report with respect to any
Product is initiated because of a defect arising from Draxis’ failure to
manufacture, test, package, store, label, release or deliver that Product or any
Materials in compliance with the Specifications, cGMPs, and GSK Group Quality

 

29

 

Policies, or the failure
of the Product to conform to Specifications, GSK shall, in addition to any
other remedies available to it, be entitled to handle the affected Product and
charges relating thereto as provided in Sections 5.10 and 5.11 below.

 

5.10                           Disposition of Certain Products.  In
the event any quantity of a Product is found not to comply with Specifications,
or in the event any recall, withdrawal, field correction or third-party return
of any Product is determined to be a result of Draxis’ failure to manufacture,
test, package, store, label, release or deliver that Product in accordance with
this Agreement, then GSK or the GSK Affiliate receiving the Product shall, at
GSK’s sole discretion, either (i) return the Product to Draxis for rework
or reprocessing by Draxis, all at Draxis’ expense; (ii) return the
affected Products for destruction by Draxis at Draxis’ expense; or (iii) have
the Product destroyed, at Draxis’ expense, in accordance with applicable law in
the jurisdiction in which destruction occurs.  In addition, GSK may seek a credit under Section 5.11
below; provided that, subject to GSK’s rights in Sections 15.4, 15.8 and 15.10
and the right of specific payment to the extent provided for in Section 15.8,
the remedies provided in this Section 5.10 shall be GSK’s sole remedy with
respect to any rejected quantity not distributed to Third Parties, and Draxis
shall have no other liability therefor.  The
party undertaking destruction of the Product shall be solely responsible for
compliance with all Legal Requirements in connection with the destruction and
shall be liable for any Losses resulting from such destruction.

 

5.11                           Credits.  In the event any rejected
quantity of a Product is found not to comply with Specifications, or in the
event any recall, withdrawal, field correction or third-party return of any
Product is determined to be a result of Draxis’ failure to manufacture, test,
package, store, label, release or deliver that Product in accordance with the
Specifications, cGMPs, GSK Group Quality Policies and Legal Requirements,
Draxis shall: (i) reimburse or credit GSK the price paid by GSK for the
affected Product, including any freight and insurance charges; (ii) reimburse
or credit GSK for the actual costs incurred in shipping, applicable transit
charges, insurance premiums, duties, taxes paid or any other out-of-pocket
charges incurred in connection with such Product; (iii) reimburse or
credit GSK for any out-of-pocket costs paid by GSK to Third Parties for
transportation and destruction of the Product; and (iv) pay or provide a
credit to GSK for the actual administrative expenses and all other reasonable
costs incurred by GSK outside of the ordinary course of business in connection
with the disposition of a Product under this Article V.  GSK shall provide Draxis with such information
and documentation as Draxis may reasonably request to confirm any of the
foregoing charges, costs or expenses.  Alternatively,
GSK may apply a debit to one or more outstanding invoices issued pursuant to Section 3.5
above provided GSK promptly gives Draxis written notice of such debit.  If there is outstanding credit to GSK on the
termination of this Agreement, Draxis shall reimburse GSK for the amount of
such credit within thirty (30) days after this Agreement is terminated.

 

5.12                            Product Returns from the Field.  GSK
shall instruct its distributors and customers to direct any returns of Products
to GSK in accordance with GSK’s standard return policy.  Draxis shall promptly notify GSK in writing
(including all information Draxis has relating thereto) in the event that any
distributor, customer or other third party returns any Product to Draxis.  Draxis shall, at GSK’s expense, promptly
forward all such Product to the location specified by GSK, and shall take no
other action regarding such Product (except for safeguarding such Product),
unless

 

30

 

requested in writing by GSK or required by Legal Requirements.  After a commercially reasonable period of time
safeguarding the Products so held, Draxis may destroy the Products if it has
given written notice of its intention to GSK and GSK has not directed otherwise
within ten (10) business days of receipt of that notice.

 

5.13                           Samples.  Draxis shall retain samples
from each batch of Products for a period of one (1) year after the
shipment of such batch to GSK or such longer period required by applicable laws
and regulations for record keeping, testing and regulatory purposes or
specified in the Technical Terms of Supply for each Product.  When storing Products or Product-derived
wastes, Draxis shall comply with, and shall maintain all storage facilities in
compliance with Specifications and in accordance with cGMPs, GSK Group Quality
Policies, Regulatory Acts, and Legal Requirements.

 

5.14                           Annual Product Review.  No
later than each January 1 during the Term, Draxis shall prepare, and
provide to GSK, an Annual Product Review for the Products as required by cGMPs and
applicable regulations.  Each Annual
Product Review will cover all aspects of manufacturing that occur at the
Facility or at the facility of any party with whom Draxis subcontracts pursuant
to Section 17.8 of this Agreement.  Each
Annual Product Review will include, without limitation, stability testing
record trends, summaries of changes, deviation report trends, release testing
records trends, production record trends and other relevant data, to allow GSK
to produce an annual product quality review as required by the GSK Group
Quality Policies.

 

Article VI

Regulatory Matters

 

6.1                                 Consents.  Draxis holds all Consents now
required by Draxis for the performance of its obligations under this Agreement
for Products currently being produced for commercial supply and, pursuant to Section 5.1
of the Technical Transfer Agreement, Draxis shall be responsible for obtaining
the Consents necessary for production and sale to GSK or GSK Affiliates of all
other Products for markets described on Schedule 2.1 to the
Specific Product Supplement(s).  At all
times, Draxis shall maintain and comply with all the Consents which may from
time to time be required by any Governmental Body having jurisdiction with
respect to its manufacturing operations and facilities and otherwise to be
obtained by Draxis to permit the performance of its then current obligations
under this Agreement.  Draxis shall bear
all expenses incurred in connection with its obligations under this Section 6.1.
 In the event any Consent held by Draxis
relating to the Facility or its ability to manufacture the Products in
accordance with this Agreement is hereafter suspended or revoked, or in the
case of any Consents required for Products for future supply, or Draxis has material
restrictions imposed upon it by any Governmental Body affecting any of the
Products or the Facility, Draxis shall immediately notify GSK and shall
promptly provide a schedule of compliance and such other information
related thereto as is reasonably requested by GSK.

 

6.2                                 Product Consents.  GSK
and GSK Affiliates shall, at their expense, obtain and maintain any Consents
which may from time to time be required by any Governmental Body with respect
to ownership of the Drug Applications or with respect to the marketing,
distribution, clinical investigation, import or export of the Products.  GSK shall, with Draxis’ assistance and

 

31

 

cooperation, be responsible for responding to all requests for
information required by GSK’s Consents from, and making all legally required
filings relating to GSK’s Consents with, any Governmental Body having
jurisdiction to make such requests or require such filings.  The Parties anticipate that Draxis shall, in
the ordinary course of its business, maintain sufficient staff to assist and
cooperate with GSK in connection with the making of all legally required
filings with respect to the Products.  In
the event any Consent held by GSK relating directly to any of the Products is
hereafter suspended or revoked, GSK shall promptly notify Draxis of the event
and shall promptly inform Draxis of the impact on GSK’s purchases of the
affected Product (when known by GSK) and GSK’s general intentions with respect
to the affected Product.

 

6.3                                 Compliance with Laws.  In
carrying out its obligations under this Agreement, Draxis shall comply in all
respects with cGMPs, GSK Group Quality Policies, Regulatory Acts and applicable
Legal Requirements in effect from time to time.

 

6.4                                 Drug Application Documentation.  GSK
shall maintain Drug Applications at such location as GSK determines, in its
discretion from time to time.  Upon
reasonable request from Draxis, GSK shall provide Draxis with information
regarding Drug Applications, or discrete sections thereof, to the extent
reasonably needed by Draxis to perform its obligations under this Agreement;
provided, however, that information provided hereunder shall not be provided or
disclosed to any other party without GSK’s prior consent.

 

6.5                                 Regulatory Changes.  The
Parties will promptly notify each other of any material revisions or amendment
of or additions to cGMPs and will confer with each other with respect to the
best means to comply with such requirements.

 

6.6                                 Import/Export Matters.

 

(a)                                  Export Program.  The
Parties acknowledge that Draxis will be providing Product to GSK or GSK
Affiliates for export by GSK or GSK Affiliates to numerous countries outside
Canada.  Accordingly, Draxis shall abide
by GSK’s export procedures set forth in the Technical Terms of Supply for that
Product.  Such procedures do and will conform
to Legal Requirements as adopted and amended from time to time by GSK or GSK Affiliates
to which Products are shipped.

 

(b)                                 Export Regulations.  In
shipment of Products, GSK and GSK Affiliates shall comply with applicable
export restrictions and GSK’s export policies as amended from time to time, and
GSK shall be the exporter of record for the Products.  GSK and GSK Affiliates shall also obtain and
maintain at their respective expense all required export permits and approvals.
 Draxis shall provide GSK such data,
documentation and other information reasonably required for GSK to fulfill its
obligations hereunder, including, without limitation, the Certificates as
provided in Section 5.2(a) above.

 

32

 

6.7                                 Regulatory Inspections.

 

(a)                                  Procedures.  If Draxis is notified that any
Product or the Facility will be subject to an inspection by any Governmental
Body, Draxis shall:

 

(i)                                     Immediately advise the GSK Head of Quality,
Manufacturing and Strategic Alliances, or his designee by telephone and
facsimile and provide all relevant information known to Draxis regarding such
investigation;

 

(ii)                                  Fully cooperate with and allow any such
inspection to the extent required by Legal Requirements;

 

(iii)                               Except as otherwise required by Legal
Requirements, Draxis shall not permit any inspections involving any Product or
GSK’s Confidential Information covered by Article XIII of this Agreement
until further instructions in writing are received from the GSK Head of Quality,
Manufacturing and Strategic Alliances, and Draxis agrees that GSK or GSK
Affiliates shall have the right to be present at any inspection involving any
Product;

 

(iv)                              Promptly send GSK a copy of any inspection
report observations related to the manufacture, generation, processing,
storage, transportation, distribution, treatment, disposal or other management
of Products or Materials as well as responses to any inspection reports
prepared in accordance with this Section 6.7.

 

Notwithstanding the foregoing provisions of Section 6.7(a),
nothing shall oblige Draxis to disclose information to GSK or GSK Affiliates
relating to any other customer of Draxis or those customer’s products to which
the inspection relates.

 

(b)                                 Notification.  If
any Governmental Body shall take any action which shall require a response or
action by Draxis with respect to any Product, Specifications, Material, the
Facility, or any operating procedure affecting the Products, Draxis agrees, in
light of GSK’s interest in the Products, immediately to notify GSK of the
required response or action and shall proceed only with the advice and consent
of GSK, which shall not be unreasonably withheld, conditioned or delayed.  GSK acknowledges Draxis’ responsibility with
respect to responding to any Governmental Body and shall respond accordingly.

 

Article VII

Intellectual Property

 

7.1                                 Ownership.

 

(a)                                  GSK Rights.  Draxis acknowledges and agrees
that, as between GSK and Draxis, GSK owns all rights in and to the GSK
Intellectual Property, including all Intellectual Property rights in and to the
Products, the Drug Applications for the Products, the Data (as defined below)
and documentation, specifications and processes associated with the Products
(except as specified in Section 7.2 below), the Drug Applications for the
Products and Data, except to the extent that such items are in the public
domain or owned

 

33

 

by a Third Party.  In particular,
Draxis acknowledges and agrees that: (i) all of the Specifications contain
valuable trade secrets and confidential information of GSK and are and shall
remain the copyrighted works of GSK; and (ii) all of the patents,
trademarks and Product formulation software files owned by GSK which apply to
the manufacture, use or sale of Products covered by this Agreement are and
shall remain GSK Intellectual Property.  Except
as expressly provided in Section 7.3 below, nothing in the Agreement shall
be deemed to transfer or convey, expressly or by implication, any GSK Rights to
Draxis.

 

(b)                                 Draxis Rights.  GSK
acknowledges and agrees that Draxis owns all rights in and to the Draxis
Intellectual Property.

 

(c)                                  Trademark Rights. 
Draxis acknowledges and recognizes the great value of the publicity and
goodwill associated with the GSK trademarks as well as such other tradenames
owned by GSK that GSK may use in connection with the Products from time to time  (collectively, the  “Marks”), and acknowledges that all such
goodwill belongs exclusively to GSK.  At
GSK’s request and reasonable expense, Draxis shall cooperate reasonably and in
good faith with GSK for the purpose of securing and preserving GSK’s rights in
and to the Marks.  Except as set forth in
Section 7.3(c) below, nothing in this Agreement shall be construed as
an assignment or grant to Draxis of any right, title or interest in or to the
Marks.  Draxis shall not register or
attempt to register any of the Marks, alone or in combination with other
elements, as a trademark, service mark, corporate name, trade name or other designation
of origin.  GSK’s failure to register or
election not to register any of the Marks shall not be deemed an abandonment or
waiver of any such rights.

 

7.2                                 New Developments and Modifications.

 

(a)                                  Product Developments.  All
Intellectual Property relating to a Product conceived, reduced to practice,
authored, or otherwise generated or developed in whole or in part in the course
of activities under this Agreement, excluding any development described in Section 7.2(d) below,
whether patentable or not, and any authorship of works relating to a Product,
including any trademarks, trade dress, trade secrets or copyrights, shall be “Product
Developments.” Such Product Developments shall include without limitation, any
know-how or improvements relating to the Products or the manufacture of the
Products, conceived, reduced to practice or otherwise developed solely by or on
behalf of Draxis, in connection with the performance of its obligations
hereunder.

 

(b)                                 Ownership of Product Developments. 
Without further payment to Draxis, GSK shall own all right, title and
interest in and to all Product Developments, whether made, conceived, reduced
to practice, authored or otherwise generated or developed solely by Draxis
personnel, solely by GSK personnel, or jointly by Draxis and GSK personnel, and
all rights to Intellectual Property arising therefrom.  Draxis will, and hereby does, assign to GSK
all of its rights, title and interest in and to Product Developments and rights
to Intellectual Property arising therefrom.  Draxis will provide reasonable assistance to
GSK, at GSK’s expense, in obtaining and enforcing and defending GSK’s ownership
of the Product Developments and appurtenant rights to Intellectual Property,
including without

 

34

 

limitation and as applicable, the assignment to GSK of all their right,
title and interest of its employees or independent contractors in and to such
Product Developments and appurtenant rights to Intellectual Property.

 

(c)                                  Patents.  As soon as practicable after
reduction to practice by Draxis of any Product Development, Draxis shall inform
GSK in writing of such Product Development.  Draxis may not implement or use any Product
Development that would require a change to the Specifications without the prior
written consent of GSK.  Notwithstanding
any obligation of confidentiality between Draxis and GSK under Section 13.3
hereto or any other agreement, GSK, at its own expense, may elect to file and
prosecute appropriate patent applications and maintain patents issuing
therefrom covering such inventions.  Upon
GSK’s reasonable request and at GSK’s expense, Draxis shall take such
reasonable actions as GSK deems necessary or appropriate to assist GSK in
obtaining patent or other proprietary protection in GSK’s name with respect to
all Product Developments.

 

(d)                                 Draxis Developments.  All
Intellectual Property conceived, reduced to practice or otherwise developed
solely by or on behalf of Draxis in connection with the performance of its
obligations hereunder that has general applicability to the manufacture of pharmaceutical
products other than the Products, including any inventions, whether patentable
or not, trade secrets or copyrights that is properly identified and obtained in
accordance with this Section 7.2(d) shall be owned by Draxis.  All Intellectual Property relating to a
Product conceived, reduced to practice or otherwise developed by or on behalf of
Draxis shall be owned by Draxis only if (i) conceived and proposed by
Draxis, rather than GSK, (ii) such Intellectual Property constitutes a
novel and dramatic change in the manner of producing a Product, (iii) it
is undertaken by Draxis in strict compliance with the provisions of Section 7.2(e) below
and (iv) does not utilize or is not based on any of the GSK Intellectual
Property.  Intellectual Property
described in this Section 7.2(d) and owned by Draxis shall be a “Draxis
Development.”

 

(e)                                  Process for Identifying Draxis Developments.  As
soon as practicable, Draxis shall inform GSK in writing of any Draxis
Development (proposed or reduced to practice).  Within sixty (60) days after receipt of notice
under this Section 7.2(e), GSK shall, in writing, consent to the
designation of that Intellectual Property as a Draxis Development or object to
the designation of such Intellectual Property as a Draxis Development.  If Draxis fails to give notice on a timely
basis as required under this Section 7.2(e), Draxis’ ownership of any
Draxis Development vis a vis GSK or any GSK Affiliate will be suspended until
Draxis has given notice as required under this section, but this suspension shall
not affect Draxis’ rights with respect to other third parties.  Notwithstanding any GSK Consent to the
designation of any Intellectual Property as a Draxis Development, Draxis may
not implement or use any Draxis Development for the manufacture of Products
that would require a change to the Specifications without the prior written
consent of GSK in accordance with Section 4.2 above and the grant of a
license to GSK and GSK Affiliates, on terms mutually acceptable to GSK and
Draxis, to use or exploit the Draxis Development or the written waiver by GSK
of its right to the license.  Upon GSK’s
request, Draxis and GSK shall enter into good faith negotiations regarding the
terms of Draxis’ license to GSK of the

 

35

 

right to use and/or exploit a Draxis Development.  The Parties contemplate that such license
terms would provide GSK with the nonexclusive, nontransferable right to make,
have made, use and sell Products that practice such Draxis Development at any
location.

 

7.3                                  Grant of Licenses.

 

(a)                                  By GSK.  Under the terms and subject to
the conditions of this Agreement, GSK hereby grants Draxis the non-exclusive,
royalty-free right during the Term of this Agreement, under the GSK
Intellectual Property and the Product Developments (collectively, the “GSK
Rights”) to utilize the GSK Rights to the extent required solely to perform
Draxis’ obligations under this Agreement.  Draxis will have no right or license to make,
manufacture, supply, distribute or sell the Products or use any GSK Rights or
Product Developments for any other purpose.  All license rights with respect to each
Product granted to Draxis hereunder immediately shall terminate at the
expiration or termination of this Agreement.

 

(b)                                 Sublicenses.  Subject to GSK’s right of
prior approval and consent, solely to the extent: (i) necessary for Draxis
to perform under this Agreement and (ii) that GSK has the right to grant
such sublicense, GSK hereby grants Draxis a non-exclusive, royalty-free sublicense
to use any and all Patent rights, trade secrets, Marks, know-how and other proprietary
non-patented information owned by a Third Party which GSK or a GSK Affiliate
has licensed or otherwise has rights to during the Term of this Agreement
solely to perform Draxis’ obligations hereunder.  Draxis agrees to comply with all restrictions
and other terms and conditions contained in any agreements or licenses with
Third Parties of which Draxis has been given written notice.  GSK and GSK Affiliates shall be responsible for
all other obligations due to Third Parties pursuant to such sublicense
agreements.

 

(c)                                  Trademark License. 
Subject to the terms and conditions of this Agreement, GSK grants to
Draxis during the Term of this Agreement the personal, nonexclusive and nontransferable
license to use the Marks solely in the performance of its obligations under this
Agreement.  Draxis shall in no event have
any right or license to use any other Marks in connection with the Products.  The Parties acknowledge that Draxis’
performance of its obligations under this Agreement is important to preserve
the quality of the Products associated with the Marks and GSK’s goodwill
associated with the Marks.  All of the
other license limitations in Section 7.3(a) above shall also apply to
the license set forth in this Section 7.3(c).

 

7.4                                  Infringement. 
Draxis shall promptly notify GSK of any infringement, misappropriation
or other unauthorized use of an Intellectual Property Right licensed under this
Agreement that comes to Draxis’ attention after no independent investigation.  The notice shall set forth the facts of such
infringement in sufficient detail.  GSK
shall have the sole right, but not the obligation, to institute, prosecute and
control, at its expense, any action or proceeding against the Third Party
infringer of a Patent claiming a Product Development.  If GSK institutes an action against such
infringer, Draxis shall give GSK reasonable assistance and authority to
control, file

 

36

 

and prosecute the suit as necessary at GSK’s expense.  GSK shall retain any damages or other monetary
awards that it recovers in pursuing any action under this Section 7.4.

 

7.5                                 Data.

 

(a)                                  Ownership.  As between Draxis and GSK, GSK
shall be and remain the sole and exclusive owner of any and all data and
information relating to: (i) the business of GSK or any GSK Affiliate; (ii) customers
or suppliers of GSK or any GSK Affiliate, as it relates to any Product; (iii) any
of the Products, including all the Specifications therefore and any other
information relating thereto delivered by GSK to Draxis under this Agreement;
and (iv) any GSK Rights (collectively, the “Data”).  The Data shall include current, historical, archived
and outcomes information, whether or not present at the Facility or in
electronic or hard-copy form.  Except as
expressly provided in this Agreement or any other agreement between the
Parties, GSK shall own all Intellectual Property rights that may subsist in the
Data.

 

(b)                                 Draxis Access. 
Draxis agrees to access the Data only as and to the extent necessary and
appropriate for the performance of its obligations under this Agreement.  Except as expressly provided in this Agreement
or in any other agreement between the Parties, neither Draxis nor any of its
employees, agents, consultants or assigns shall have any ownership or (except
as set forth in the preceding sentence) usage rights in any of the Data in any
form, including raw data, stripped data, cumulated data, usage information, summary
information and statistical information derived from or in connection with the Data.

 

(c)                                  GSK Access.  During the Term of this
Agreement and for a reasonable period of time after the expiration or
termination of this Agreement, provided that GSK has agreed to the provisions
and protections of Article XIII, GSK Visitors shall have the right to reasonable
access and copy the Data at all times during the Term of this Agreement on-site
at the Facility.  Draxis shall provide
GSK with reasonable assistance and cooperation in connection with GSK’s
exercise of this right.

 

Article VIII 

Information; Access; Audit Rights

 

8.1                                  Provision of Information.  Draxis
shall provide to GSK copies (in electronic or hard-copy form, as requested by
GSK) of all data generated during the term of this Agreement as may be requested
from time to time by GSK.

 

8.2                                  GSK Representatives.  In
connection with monitoring of this Agreement, GSK shall be allowed to have, at
its cost, representatives on site at the Facility with access to the portions
of the Facility being utilized for the manufacture of the Products for the
purpose of observing, reporting on, and consulting as to such manufacturing
efforts.  Draxis shall reasonably
cooperate in enabling such representatives to carry out their responsibilities
and will make adequate temporary

 

37

 

desk space and other reasonable resources available to these
representatives during the periods they are working at Draxis.

 

8.3                                  Inspection Rights. 
Without limiting its rights under Section 8.2  above, GSK Visitors shall have the right to
inspect those portions of the Facility used in the manufacture, generation,
storage, testing, treatment, holding, transportation, distribution or other
handling or receiving of the Products and Materials.  GSK Visitors shall have the right to inspect
all inventory of Products and Materials contained at the Facility.  Such inspections shall occur during business hours
and shall be scheduled by GSK Visitors at least two (2) business days in
advance; provided, however, that in the event of an Adverse Event or any
proposed or actual inspection by the FDA or other Governmental Body or other
emergency involving any Product, Material or the Facility, GSK Visitors shall
have the right at any time upon oral or written notice to Draxis of one (1) business
day to conduct an inspection hereunder.  Purposes
for such inspections may include cGMPs compliance, system audits, compiling
information for reporting obligations, compliance with Specifications and/or
investigations of complaints and/or compliance with any Legal Requirements, including
appropriate health, safety and environmental guidelines, provisions of the
Regulatory Acts or the terms of this Agreement GSK’s inspection rights under
this Section 8.2 shall not extend to any portions of the Facility,
documents, records or other information which do not relate to Products or
Materials or to the extent they relate or pertain to third parties or their
products or materials (other than any Divestment Party to the extent
information is required or permitted to be provided under Article IX
below).  Draxis may redact information
relating to third parties and their respective products or materials from any
documents deliverable to GSK in connection with GSK’s exercise of its
inspection rights hereunder.

 

8.4                                  Documentation.  Each
Party shall maintain, in accordance with and for the period required under
cGMPs and all other applicable laws, rules and regulations, complete and
adequate records pertaining to the methods and facilities used for the cGMPs
manufacture, processing, testing, packing, labeling, holding and distribution
of the Products.

 

8.5                                  Access.  GSK shall have unrestricted
access during normal business hours on reasonable notice at a mutually agreed
upon time to copies of records and any other documentation relating to the
manufacture of Products by Draxis under this Agreement and shall be free to
copy and use such documentation as reasonably required for any normal
regulatory or business use relating to the Products.

 

8.6                                  Audit.  GSK shall have the right to
audit Draxis in connection with the manufacture of the Products.  Purposes for such audits may include, without
limitation, cGMPs compliance, system audits, compiling information for
reporting obligations, compliance with Specifications and/or investigations of
complaints and/or compliance with any Legal Requirements, including appropriate
health, safety and environmental guidelines, provisions of the Regulatory Acts
or the terms of this Agreement, manufacturing, quality control/quality
assurance, and cost and financial records.  Draxis will provide access during reasonable
business hours to GSK representatives for such purpose and will otherwise
reasonably cooperate with such audit.

 

38

 

Article IX

Divested Products

 

9.1                                General.  The Parties acknowledge that
from time to time during the Term, GSK or GSK Affiliates may divest certain
Products by sale, assignment or license to a Third Party (each, a “Divestment
Party”) of some or all of the Drug Applications, patents, trademarks and/or
know-how related to certain Products (each such transaction, a “Divestment”).  In a Divestment, GSK may directly enter into
an agreement with the Divestment Party to supply the affected Products to the
Divestment Party.  In the event that GSK
enters into such an agreement to supply Products subject to a Divestment to a
Divestment Party, GSK agrees that Draxis will produce those Products (“Divested
Products”) for GSK pursuant to the terms of this Agreement.  GSK shall advise Draxis of each Divestment and
whether Draxis will continue to produce the affected Product for GSK pursuant
to the terms of this Agreement after such Divestment.

 

9.2                                   Effect of Divestment.  In a
Divestment, Draxis shall function as a subcontractor to supply the Divested
Products.  The Divestment shall not
diminish Draxis’ obligations hereunder and, except as specifically provided
otherwise in this Article IX, the provisions of the Agreement shall
continue to govern any Divested Product.  GSK may, in its sole discretion, direct Draxis
to perform any of Draxis’ obligations hereunder with respect to a Divested
Product for the benefit of the Divestment Party rather than for the benefit of
GSK; provided, however, in such event Draxis shall have the right to
unilaterally terminate its obligations to any Divestment Party upon two (2) years
written notice to such Divestment Party at any time on or after the second (2nd)
anniversary of the effective date of the assignment of Draxis’ obligations to
the Divestment Party.  Draxis shall have
only the authority provided pursuant to this Article IX with respect to
the manufacture, testing, packaging, storing, labeling, release, delivery or
sale to GSK and GSK Affiliates of the Divested Products, and Draxis shall in no
manner otherwise deal with the Divested Products.

 

9.3                                   Governing Provisions. 
Except as provided in Section 9.4 below, if any provision of this
Agreement relating to a Divestment is in conflict with any specific provision
of this Article IX, the specific provisions of this Article IX shall
govern.

 

9.4                                   Intellectual Property.  In
any Divestment, as between the Divestment Party and GSK or a GSK Affiliate, the
ownership of the GSK Intellectual Property shall be determined by the provisions
of the applicable agreement entered into between GSK or GSK Affiliate and the Divestment
Party; provided, however, that as between GSK and Draxis, the terms of this Agreement
shall determine the ownership of such intellectual property and other property.
 GSK shall advise Draxis of any changes,
if any, to Draxis’ rights under this Agreement arising from the Divestment.

 

9.5                                   Noncompetition.  The
Divestment of a Product shall in no way modify or limit Draxis’ obligations
under Article XVI of this Agreement.

 

9.6                                  Divested Product Inspection and Audit Rights.  Draxis
acknowledges that, as a part of GSK’s rights to inspection and audit regarding Divested
Products and Draxis’ obligations with respect thereto, and without limiting or
reducing GSK’s rights under Section 8.3 or 8.6 herein, each

 

39

 

Divestment
Party may conduct audits and inspections under Sections 8.3 and 8.6 one time
per year, solely with respect to areas of the Facility and solely with respect
to those records and documentation pertaining to the applicable Divested
Products, and not with respect to any financial records of Draxis.  The Divestment Party, GSK or GSK Affiliate
shall provide Draxis with at least thirty (30) calendar days prior written
notice, and the Divestment Party shall be obligated to sign a confidentiality
agreement with Draxis containing commercially reasonable and standard terms.  Such audits or inspection shall be conducted
by no more than two (2) representatives of such Divestment Party
reasonably experienced in the manufacturing of pharmaceuticals products, who
shall be accompanied by a qualified GSK representative knowledgeable regarding
cGMPs relating to the applicable Divested Product(s), and shall last for no
more than three (3) days.  To the
extent that GSK changes its audit practices in the future to conduct audits of
the Facility on a Product-by-Product basis, GSK shall then use reasonable
efforts to conduct its own audits of the Divested Products concurrently with
any audits conducted by the Divestment Party for the applicable Divested
Products.

 

Article X

Representations And Warranties

 

10.1                          Representations and Warranties of Draxis.  Draxis represents and warrants that:

 

(a)                                  Status; Enforceability. 
Draxis is a validly existing corporation in good standing under the laws
of the jurisdiction of its incorporation; the execution, delivery and performance
of this Agreement by Draxis (where applicable) has been duly authorized by all
requisite corporate action; this Agreement constitutes the legal, valid and
binding obligation of Draxis, enforceable against Draxis in accordance with the
terms hereof, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights and
remedies of creditors generally and the effect of general principles of equity,
whether applied by a court of law or equity; and the execution, delivery and
performance of this Agreement by Draxis will not violate or conflict with any
other agreement or instrument to which Draxis is a Party.

 

(b)                                 Capability to Perform under the Agreement.  To
fulfill its obligations under this Agreement, Draxis has allocated and will
allocate equipment, production lines, staffing, physical space and other
resources sufficient to manufacture the quantities of Products required by GSK
pursuant to this Agreement.

 

(c)                                  Certain Persons. 
Draxis has not used, in any capacity associated with or related to the
manufacture of the Products, the services of any persons who have been, or are
in the process of being, debarred under 21 U.S.C. § 335a(a) or (b) or
any comparable Regulatory Act.  Furthermore,
neither Draxis nor any of its officers, employees, or consultants has been
convicted of an offense under (i) either a federal or state law that is cited
in 21 U.S.C. § 335(a) as a ground for debarment, denial of approval,
or suspension, or (ii) any other law cited in any comparable Regulatory
Act as a ground for debarment, denial of approval or suspension.

 

40

 

(d)                                 Regulatory Consents. 
Draxis has all government approvals, permits and licenses necessary or
desirable in performance of its obligations hereunder and the manufacture of
the Products for commercial sale in the markets listed on Schedule 2.1
to the Specific Product Supplement(s) except for those regulatory consents
shown on Schedule 10.1(d) to the applicable Specific Product
Supplement.  Draxis shall obtain each of
these regulatory consents by the applicable date shown on the applicable Schedule 10.1(d).

 

(e)                                  Product Marketing and Sales.  Draxis
will not market the Products produced under this Agreement and will not sell
the Products produced under this Agreement except for sales to GSK permitted by
this Agreement.

 

(f)                                    Compliance.  The manufacture, generation, processing,
distribution, transport, treatment, storage, disposal and other handling of any
Materials or Products by Draxis until delivery to a carrier or freight
forwarder shall (i) be in accordance with and conform to the
Specifications, cGMPs and GSK Group Quality Policies;  (ii) be in accordance with and conform
to any applicable standards specified by the United States Pharmacopeia and
Pharmacopeia Forum and the European Pharmacopeia and Pharmacopeial Forum, and (iii) otherwise
conform to any provisions of the Regulatory Acts not reflected in cGMPs, the
Health, Safety, and Environmental Guidelines and, subject to reliance on GSK’s
representations and warranties in Section 10.2 below, and all Legal Requirements.
 The Products will strictly comply with
the Specifications, shall be free from defects in materials and workmanship and
shall not be adulterated or misbranded within the meaning of applicable
Regulatory Acts or the U.S. Federal Food, Drug, and Cosmetic Act.  THE REPRESENTATIONS AND WARRANTIES PROVIDED IN
THIS AGREEMENT DO NOT APPLY TO PRODUCTS TO THE EXTENT THAT, AFTER SHIPMENT BY DRAXIS,
OCCURRENCES AFFECTING OR ALTERING THE PRODUCTS AFTER THEY ARE DELIVERED TO THE
CARRIER, OR ACTIONS TAKEN OR FAILED TO BE TAKEN AFTER THE PRODUCTS WERE
SHIPPED, THE PRODUCTS FAIL TO CONFORM TO SPECIFICATIONS.  EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 10.1,
DRAXIS DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY OF ANY THIRD PARTY.

 

(g)                                 Maintenance of Facility.  During
the Term of this Agreement, Draxis shall maintain the Facility, all personal
property, equipment, machinery, systems, intangibles, intellectual property and
contract rights in use at the Facility during the Term of this Agreement in the
ordinary course of business, and free of material defects, except for defects
attributable to wear and tear consistent with the age and usage of such assets,
and except for such defects as do not and will not, in the aggregate,
materially impair the ability to use such assets in connection with the
manufacture, generation, processing, distribution, transport, treatment,
storage, disposal or other handling of any Materials or Products.

 

41

 

(h)                                 Negative Pledge.  Draxis
shall not pledge or otherwise transfer, without GSK’s prior written consent.  Materials or any work-in-process or finished
goods inventory of Products, other than to GSK or a GSK Affiliate as expressly
provided in this Agreement.

 

(i)                                     Security Measures.  Except
as otherwise provided with respect to Data in Section 7.5 of this
Agreement, Draxis shall maintain reasonable security policies at the Facility
to protect the integrity of the Products and all other GSK assets, tangible and
intangible, at the Facility.  The
security policies shall include, at a minimum, the security measures identified
in Schedule 10.1(i) to this Agreement.

 

10.2                         Representations and Warranties of GSK.  GSK
represents and warrants to Draxis that:

 

(a)                                  Status; Enforceability.  GSK
is a validly existing corporation and is in good standing under the laws of
Ontario, Canada; the execution, delivery and performance of this Agreement by
GSK has been duly authorized by all requisite corporate action; this Agreement
constitutes the legal, valid and binding obligation of GSK, enforceable against
GSK in accordance with the terms hereof, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and the effect of
general principles of equity, whether applied by a court of law or equity; and
the execution, delivery and performance of this Agreement will not violate or
conflict with any other agreement or instrument to which it is a Party;

 

(b)                                 Intellectual Property.  The
GSK Rights and other Intellectual Property licensed to Draxis pursuant to
Sections 7.3(a) and 7.3(c) and, to GSK’s best knowledge with respect
to Intellectual Property which is sublicensed pursuant to Section 7.3(b) (collectively,
the “Licensed Technology”), are free and clear of any lien, encumbrance,
security interest or restriction on license inconsistent with the rights
granted to Draxis herein, and GSK has not previously granted and will not grant
to any Third Party during the Term of this Agreement, any right, license or
interest in or to the Licensed Technology, or any portion thereof, inconsistent
with the rights granted to Draxis herein;

 

(c)                                  Licensed Property.  The
manufacture and supply of Products pursuant to this Agreement do not and shall
not require a license under any Intellectual Property owned or controlled by
GSK or a GSK Affiliate or any Third Party other than as provided to Draxis hereunder;

 

(d)                                 Noninfringement.  To
the knowledge of GSK, the manufacture and supply of Products pursuant to this Agreement in
accordance with the Specifications will not infringe the intellectual property
rights of any Third Party; and

 

(e)                                     Sufficient Rights.  The
GSK Intellectual Property together with the Licensed Technology comprises all
Intellectual Property necessary for Draxis to manufacture and supply Products
in accordance with the Specifications in effect as of the Effective Date.

 

42

 

The foregoing representations and warranties shall
apply to computer systems and software owned by Third Parties only to the
extent use of those systems or software is specifically required by the
Specifications, but shall not apply to other uses of such computer software or
systems.

 

Article XI

Liability And Indemnification

 

11.1                           Indemnity by Draxis.  Subject
to Section 11.4 below, Draxis shall indemnify, defend and hold GSK and
each GSK Affiliate who receives a Product subject to indemnity hereunder and their
respective directors, officers, employees and agents (each a “GSK Indemnitee”)
harmless from and against all Losses arising from any Third Party claim,
demand, suit, action or proceeding (a “Third Party Claim”) to the extent
arising out of (a) any breach or nonperformance of any of Draxis’
covenants, obligations, representations or warranties under this Agreement; (b) failure
to obtain, maintain or comply in any respect with any of its Consents which are
required to perform any of its obligations hereunder or under the Regulatory
Acts or other Legal Requirements; (c) any violation of Legal Requirements
by Draxis in the performance of its obligations hereunder; (d) any infringement
or misappropriation of Third Party rights to Intellectual Property that is a
result of the use or practice in the manufacturing process for the Products
that is requested by Draxis and not found in the initial Specifications.  The foregoing indemnification obligations
shall not apply in each case to the extent any particular Loss is a direct
result of (i) the negligence or intentional misconduct of a GSK
Indemnitee; (ii) a breach by GSK of a representation or covenant
hereunder; (iii) any matter for which GSK is obligated to indemnify Draxis
pursuant to Section 11.2 herein; (iv) any failure by GSK to comply
with the applicable Regulatory Acts; or (v) Draxis’ compliance with the
Specifications or an order of a Governmental Body directed to Draxis
specifically regarding its compliance with cGMPs, the applicable Regulatory
Acts, or Legal Requirements.  Nothing in
this Section 11.1 or Section 11.2 below shall be construed to limit,
and these provisions shall be in addition to, any indemnification provision, in
any other agreement between the Parties.

 

11.2                           Indemnity by GSK. 
Subject to Section 11.4 below, GSK shall indemnify, defend and hold
Draxis and the Draxis Affiliates and their respective directors, officers,
employees and agents (each a “Draxis Indemnitee”) harmless from and against all
Losses not otherwise reimbursed by GSK to Draxis arising from, based upon or
caused by (a) the distribution or marketing of Products by GSK or any GSK
Affiliate acquiring Product directly or indirectly pursuant to this Agreement
and/or the administration or use thereof, (b) GSK’s failure to obtain,
maintain or comply in any respect with any of its Consents which are required
to perform any of its obligations hereunder, or export permits or under the
Regulatory Acts or other Legal Requirements, (c) breach of any of GSK’s
covenants, obligations, representations or warranties under this Agreement, (d) any
claim that the practice by Draxis of the Intellectual Property licensed
hereunder, or the manufacture, use or sale of the Products constitutes trade
secret misappropriation or infringes the intellectual property rights of any
Third Party, or (e) in the event GSK or any GSK Affiliate is obligated to
provide any Materials to Draxis, the failure of GSK or any GSK Affiliate to
provide Draxis with Materials that are in compliance with the Specifications,
Regulatory Acts or other Legal Requirements.  The foregoing indemnification obligations
shall not apply in each case to the extent any particular Loss is a direct
result of (i) the negligence or intentional misconduct of a

 

43

 

Draxis Indemnitee or (ii) any matter for which Draxis is obligated
to indemnify GSK pursuant to Section 11.1 above.  Nothing in this Section 11.2 or Section 11.1
above shall be construed to limit, and these provisions shall be in addition to,
any indemnification provision in and any other agreement between the Parties.

 

11.3                           Procedures.  Any indemnification of GSK, GSK
Affiliates, Draxis or Draxis Affiliates hereunder shall include and extend to
the benefit of their respective shareholders, directors, officers and
employees.  Any person that may be
entitled to indemnification under this Agreement (an “Indemnified Party”) shall
give written notice to the Person obligated to indemnify it (an “Indemnifying
Party”) with reasonable promptness upon becoming aware of any claim or other
facts upon which a claim for indemnification will be based; the notice shall
set forth such information with respect thereto as is then reasonably available
to the Indemnified Party.  The Indemnifying
Party shall have the right to undertake the defense of any such claim asserted
by a Third Party with counsel reasonably satisfactory to the Indemnified Party
and the Indemnified Party shall cooperate in such defense and make available
all records, materials and witnesses reasonably requested by the Indemnifying
Party in connection therewith at the Indemnifying Party’s expense.  If the Indemnifying Party shall have assumed
the defense of the claim with counsel reasonably satisfactory to the
Indemnified Party, the Indemnifying Party shall not be liable to the Indemnified
Party for any legal or other expenses (other than for reasonable costs of investigation)
subsequently incurred by the Indemnified Party in connection with the defense thereof.
 The Indemnifying Party shall not be
liable for any claim settled without its consent, which consent shall not be
unreasonably withheld or delayed.  The
Indemnifying Party shall obtain the written consent of the Indemnified Party
prior to ceasing to defend, settling or otherwise disposing of any claim if as
a result thereof the Indemnified Party would become subject to injunctive or
other equitable relief or if the Indemnified Party may reasonably object to
such disposition of such claim based on a continuing adverse effect on the
Indemnified Party.

 

11.4                           Limitations.  Notwithstanding any provision
of this Agreement to the contrary, in no event shall either Party be liable to
the other, or have any obligation to indemnify any GSK Indemnitee or Draxis
Indemnitee, as the case may be, for any consequential or indirect damages or Losses
including any loss of profits suffered by GSK or Draxis, however caused and on
any theory of liability, regardless of any failure of essential purpose of any
remedy available under this Agreement.  The
foregoing limitation on liability shall not be applicable to consequential or
indirect damages or Losses, including without limitation, lost profits incurred
by the Indemnified Party, as a direct result of any failure by the Indemnifying
Party to perform its obligations under this Agreement which the Indemnified
Party can demonstrate is due to willful misconduct or gross negligence by the
Indemnifying Party or any of its employees; provided, in no event should the Indemnifying
Party’s liability for such consequential or indirect damages or Losses, including
without limitation, lost profits under this Article XI exceed U.S. $10
million in the aggregate.  The Indemnified
Party shall inform the Indemnifying Party in writing of its intent to seek
damages pursuant to the foregoing sentence and provide the Indemnifying Party
with reasonable opportunity to remediate any such Loss; provided, that nothing
in this sentence shall relieve the Indemnifying Party from performing its
obligations in accordance with the terms of this Agreement.

 

44

 

Article XII

Insurance

 

12.1                           Coverage Requirements. 
Draxis shall at all times maintain in full force and effect with
financially sound and reputable carriers reasonably satisfactory to GSK the
types and amounts of coverage shown on Schedule 12.1 to this Agreement.

 

12.2                         Certificates of Insurance. 
Draxis shall have its insurance carrier or carriers furnish to GSK
certificates that all insurance required under this Agreement is in force, such
certificates to indicate any deductible and/or self-insured retention, and the
effective expiration dates of policies, and such certificates to stipulate that
GSK shall be given sixty (60) days written notice of all cancellation,
non-renewal or material changes in the policy.

 

12.3                         Additional Insured and Waiver of Subrogation.  GSK
shall be named as an additional insured on all product liability policies of
Draxis, but only in respect of GSK’s liabilities arising out of Draxis’
operations or obligations under this Agreement.

 

Article XIII

Confidentiality

 

13.1                           Definition of “GSK Confidential Information”.  As
used herein, the term “GSK Confidential Information” shall mean all
confidential business and technical communications, documents and other
information, whether in written, oral or other form, which GSK or a GSK Affiliate
furnishes or discloses to Draxis or which Draxis otherwise learns in connection
with the negotiation or performance of this Agreement (whether relating to GSK,
a GSK Affiliate or any Third Party for which GSK has an obligation of
confidentiality).  Draxis agrees that the
provisions of this Agreement shall apply to all GSK Confidential Information
disclosed by GSK or a GSK Affiliate to Draxis or learned by Draxis prior to the
Effective Date.  Draxis represents and
warrants that prior to the Effective Date, it has not used or disclosed to any
Third Party any GSK Confidential Information, except as would be permitted
hereunder.

 

13.2                           Definition of “Draxis Confidential
Information”.  As used herein, the term “Draxis Confidential
Information” shall mean (i) all confidential business information and (ii) technical
communications, documents or other information in each case, not constituting
GSK Rights whether in written, oral or other form, of Draxis or a Draxis
Affiliate that are disclosed to GSK by Draxis or a Draxis Affiliate or GSK
otherwise learns in connection with the negotiation or performance of this
Agreement; provided, however, that all information relating to the Products shall
be GSK Confidential Information.  GSK
agrees that the provisions of this Agreement shall apply to all Draxis
Confidential Information disclosed by Draxis or any Draxis Affiliate or learned
by GSK prior to the Effective Date.

 

13.3                           Treatment of Confidential Information.  Both
during the Term of this Agreement and thereafter, Draxis shall treat all GSK
Confidential Information and GSK shall treat all Draxis Confidential
Information in accordance with the requirements of this Article XIII.  For convenience, GSK Confidential Information
and Draxis Confidential Information are both referred to herein as

 

45

 

“Confidential Information” for purposes of establishing the obligations
of each Party with regard to the other Party’s Confidential Information.

 

(a)                                  Nondisclosure. 
Confidential Information of the other Party shall be kept strictly
confidential by the receiving Party and, except as expressly permitted herein,
shall not be disclosed to any Third Party by the receiving Party in any manner
whatsoever including without limitation, any affiliates, in whole or in part,
without first obtaining the other Party’s prior written consent to such
disclosure.  The standard of care
required of each Party in protecting the confidentiality of the other Party’s
Confidential Information shall be at least the same standard of care that the
receiving Party uses in protecting its own confidential and trade secret
information, but in no event shall either Party use less than a reasonable
standard of care.  Confidential
Information may be used by the receiving Party only for the purpose of
performing under this Agreement.

 

(b)                                 Permitted Exceptions.  Each
Party may disclose the other Party’s Confidential Information (i) to its
employees or outside advisors and financing sources in connection with this
Agreement who reasonably need to know such information for the purpose of
advising or assisting it in connection with this Agreement (each, a “Representative”),
(ii) to a Third Party pursuant to a contractual obligation under a
material contract, whereby failure to disclose such Confidential Information
shall have material adverse effect on the disclosing Party, and (iii) to
any Parties required under operation of law.  Draxis may disclose GSK’s Confidential
Information to its minority shareholder, SGF Sante Inc. Prior to disclosing any
Confidential Information to any Representative pursuant to this Section 13.3(b),
the receiving Party will inform such Representative of the proprietary nature
of the Confidential Information and will require such Representative to agree
in writing (except in the case of outside legal advisors or auditors engaged to
prepare the Company’s financial statements, who may orally agree) to be bound
by the requirements of this Article XIII and not to use or disclose the
Confidential Information except as permitted herein.  The requirements of the preceding Section shall
also apply to Draxis in the event it intends to disclose any Confidential
Information to SGF Sante Inc.  Each Party
agrees to be responsible for any breach of these confidentiality obligations by
its Representatives.  It is specifically
agreed that (i) GSK may disclose Draxis Confidential Information to any
GSK Affiliate under the same conditions provided in this Article XIII on a
need-to-know basis and (ii) Draxis may disclose GSK Confidential
Information to any Draxis Affiliate under the same conditions provided in this Article XIII
on a need-to-know basis.

 

(c)                                  Consent.  Confidential Information of
the other Party shall not be utilized by a receiving Party except as expressly
permitted herein, without first obtaining the other Party’s prior written
consent to such utilization and without first entering into a separate agreement
duly executed by authorized representatives of the Parties hereto.

 

13.4                           Excluded Information. 
Notwithstanding any provision herein to the contrary, the requirements
of this Article XIII shall not apply to any information of either Party
which:

 

46

 

(a)                                  at the time of disclosure hereunder is
generally available to the public;

 

(b)                                 after disclosure hereunder becomes generally
available to the public, except through breach of this Article XIII by the
receiving Party or its Representatives;

 

(c)                                  was not acquired directly or indirectly from
the disclosing Party or its Affiliates and which the receiving Party lawfully
had in its possession prior to disclosure by the disclosing Party;

 

(d)                                 is independently developed by employees or
agents of the receiving Party without the use of the Confidential Information
of the disclosing Party; or

 

(e)                                  becomes available to the receiving Party from
a Third Party that is not legally prohibited from disclosing such Confidential
Information, provided such information was not acquired directly or indirectly
from the disclosing Party or its Affiliates.

 

13.5                           Notification of Mandatory Disclosure.

 

(a)                                  Procedures.  In the event that either Party
is required by applicable law or regulation or by judicial or administrative
process to disclose any part of the other Party’s Confidential Information,
such Party shall (i) promptly notify the other Party of each such requirement
and identify the documents so required thereby, so that the other Party may seek
an appropriate protective order or other remedy and/or waive compliance by the
first Party with the provisions of this Article XIII, (ii) consult
with the other Party on the advisability of taking legally available steps to
resist or narrow the scope of such requirement, (iii) assist the other
Party in seeking a protective order or equivalent, and (iv) comply with
any applicable protective order or equivalent.

 

(b)                                 Limitations.  If, in the absence of such a
protective order or such a waiver by the other Party of the provisions of this Article XIII,
the first Party is nonetheless required by mandatory applicable law to disclose
any part of the other Party’s Confidential Information, the first Party may
disclose such of the other Party’s Confidential Information without liability
under this Agreement, except that the first Party shall (i) furnish only
that portion of the other Party’s Confidential Information which is legally
required and (ii) use its best efforts to obtain an order or other
reliable assurances that confidential treatment will be accorded to the portion
of such Confidential Information so required to be disclosed.

 

13.6                           Publicity.  Draxis will not issue any
press release or otherwise make any public statement, advertisement or
disclosure with respect to this Agreement, any of the Products, or the transactions
contemplated hereby without the prior written consent of GSK, such consent not
to be unreasonably withheld and GSK will not issue any press release or
otherwise make any public statement with respect to this Agreement or that
refers directly or indirectly to Draxis as a manufacturer of the Products
without the prior written consent of Draxis, such consent not to be
unreasonably withheld; provided, however, that either Party shall be entitled
to make a public

 

47

 

announcement
of this Agreement after giving prior written notice to the other Party hereto,
if, in the opinion of the disclosing Party’s legal counsel, such announcement
complies with applicable laws and provided to the extent practicable the other
Party has received at least two (2) days notice.

 

13.7                           Return of Confidential Information.  At
any time upon the request of the other Party, to the extent such Confidential
Information is not reasonably necessary to enable a Party to perform its
obligations under this Agreement, the receiving Party shall promptly return to
the other Party or destroy the other Party’s Confidential Information, and
shall destroy all copies thereof, together with all notes, drawings, abstracts
and other information relating to the other Party’s Confidential Information
prepared by the receiving Party or any of its Representatives, regardless of
the medium in which such information is stored; provided, however, that the
receiving Party may maintain a single archival copy of the other Party’s
Confidential Information in its files for purposes of establishing the extent
of disclosures by the other Party under this Agreement.  At either Party’s written request, such Party’s
Confidential Information that is otherwise required to be returned to it shall
be destroyed by the receiving Party and such destruction shall be certified in
writing by an authorized officer of the receiving Party.  The return and/or, destruction of such
Confidential Information as provided above shall not relieve the receiving
Party of its other obligations under this Article XIII.

 

Article XIV

Force Majeure Event

 

14.1                           General.  Notwithstanding any provision
of this Agreement to the contrary, neither Party shall be liable to the other
on account of any failure to perform or on account of any delay in performance
of any obligation under this Agreement, if and to the extent that such failure
or delay shall be due to a cause beyond the control of the relevant Party and
which, by the exercise of its commercially reasonable efforts of diligence and
care, such Party could not reasonably have been expected to avoid (a “Force
Majeure Event”).  The Party experiencing
the delay and seeking relief under this Article XIV shall promptly notify
the other Party of the delay and use commercially reasonable efforts to
overcome such delay.  The Party affected
shall promptly notify in writing the non-affected Party of the specific causes
beyond the control of the affected Party and the probable duration of the
delay, and that Party shall be excused from the performance of such obligation
to the extent such performance is necessarily prevented, hindered or delayed
thereby during the continuance of any such happening or event.  This Agreement, in so far as it relates to
such obligation, shall be deemed suspended so long as and to the extent that
such cause delays the performance of any Force Majeure Event obligation.

 

14.2                           Termination; Transition.  If
as a result of the conditions referred to in Section 14.1, Draxis is
unable to fully perform its obligations for a period of six (6) months,
GSK shall have the right to terminate this Agreement upon thirty (30) days
prior notice to Draxis.  In the event GSK
terminates this Agreement as provided in this Section 14.2, Draxis agrees
to use commercially reasonable efforts to assist GSK to transfer the
manufacture of the Products to any other facility or facilities selected by
GSK, in its sole discretion.

 

48

 

Article XV

Term; Termination; Remedies

 

15.1                           General.

 

(a)                                  Unless earlier terminated pursuant to Section 15.4
or Section 15.7 of this Agreement, Draxis shall be obligated to produce
Products under this Agreement until the effective date specified in a
Termination Notice validly delivered pursuant to Section 15.1(b) below
(the period from the date of this Agreement until such date is the “Term”).  Upon the occurrence of this date, such
Agreement shall terminate.

 

(b)                                 Either party may terminate this Agreement by
delivery of a two (2) year advance, written notice given on or after December 31,
2007.

 

15.2                           Draxis Material Default. “Draxis Material Default” shall mean the
occurrence of any of the events listed below, regardless of whether the
occurrence is voluntary or involuntary; provided, however, that none of the
following occurrences shall constitute a “Draxis Material Default” to the
extent such occurrence is a direct result of (i) a breach by GSK of
representation, warranty or covenant hereunder; (ii) any failure by GSK to
comply with Legal Requirements to the extent they pertain to the Products or
the Regulatory Acts; (iii) a GSK Material Default; (iv) Draxis’
compliance with an order of a Governmental Body directed to Draxis specifically
regarding its compliance with cGMPs, the Regulatory Acts, or Legal
Requirements; or (v) a Force Majeure Event:

 

(a)                                  An assignment or attempted assignment of this
Agreement or the rights or obligations arising hereunder by Draxis, in
violation of this Agreement;

 

(b)                                 Insolvency or general failure of Draxis to
pay its debts as they become due; entrance of Draxis into receivership or any
arrangement with creditors generally; filing of a voluntary or involuntary
petition or other action or proceeding for bankruptcy or reorganization or
dissolution or winding-up of Draxis; a general assignment for the benefit of
Draxis’ creditors; or a foreclosure or sale of a material part of Draxis’
assets by or for the benefit of any creditor or governmental agency;

 

(c)                                  A material breach or failure by Draxis with
respect to any material obligation or covenant under this Agreement, including
Draxis’   failure to comply with the Specifications
cGMPs, Regulatory Acts, Legal Requirements or the terms of any Purchase Order,
that is not remedied by Draxis within thirty (30) days after receiving notice
thereof or, if such breach or failure is susceptible of cure but cannot be
reasonably cured within thirty (30) days, unless Draxis in good faith promptly
commences pursuing such cure and diligently and continually does so but is
delayed in completion by factors beyond its control after the use of
commercially reasonable efforts, (but in no event to exceed ninety (90) days from
the date of GSK’s notice);

 

49

 

(d)                                 A breach by Draxis of Draxis” obligations
under Article XVI (covenant not to compete) that is not remedied by Draxis
within thirty (30) days after receiving notice thereof;

 

(e)                                  Upon a Proposed Change of Control Transaction
if Draxis failed to provide GSK notice as required under Section 15.9
below;

 

(f)                                    Draxis’ failure to correct a Key Concern, as
defined in Section 15.8(b) below within (i) the time period
agreed to by the Parties in the case of the first audit observation and subject
to the election of remedies provisions of Section 15.8 below; or (ii) in
the case of any subsequent audit observation, within thirty (30) days after
receiving written notice from GSK; or

 

(g)                                 In any three (3) year period, Draxis’
failure, more than one time, to deliver, by the specified Delivery Date, at
least seventy-five percent (75%) of the aggregate volume of Products with
Delivery Dates within any three (3) month period.

 

15.3                            Other Draxis Default.  “Other
Draxis Default” shall mean the breach or failure by Draxis with respect to any
obligation, covenant, representation, warranty or condition under this Agreement
that is not remedied by Draxis within thirty (30) days after receiving written
notice thereof from GSK, other than a “Draxis Material Default,” or if such
breach or failure is susceptible of cure but cannot be reasonably cured within
thirty (30) days, unless Draxis in good faith promptly commences pursuing such
cure and diligently and continually does so but in no event to exceed sixty
(60) days from the date of GSK’s notice.  Notwithstanding the foregoing, none of the foregoing
occurrences shall constitute an Other Draxis Default to the extent such
occurrence is a direct result of (i) a breach by GSK of a representation,
warranty or covenant hereunder; (ii) any failure by GSK to comply with the
Legal Requirements or Regulatory Acts or to perform any of its obligations
under this Agreement; (iii) Draxis’ compliance with the Specifications or
an order of a Governmental Body directed to Draxis specifically regarding its
compliance with cGMPs, the Regulatory Acts, or Legal Requirements; or (iv) a
Force Majeure Event.

 

15.4                            Effect of Draxis Default.

 

(a)                                  Draxis Material Default.  Upon
the occurrence of a Draxis Material Default, GSK shall have the right to
terminate this Agreement immediately or at such other date specified under this
Agreement and seek all other remedies available under law or in equity.

 

(b)                                 Other Draxis Default.  Upon
the occurrence of an Other Draxis Default, GSK shall have no right to terminate
this Agreement, but GSK shall have the right to seek all other remedies
available under law.

 

15.5                            GSK Material Default.  A “GSK
Material Default” shall occur upon GSK’s repeated failure to pay an amount
specified in this Agreement due to Draxis under this Agreement, other than the
portion of any payment hereunder that is the subject of a pending dispute
identified by GSK in a written notice delivered to Draxis following receipt of
an invoice or other demand for

 

50

 

payment made hereunder stating the amount and basis of GSK’s good faith
objection or challenge within ten (10) business days after receiving
written notice of non-payment from Draxis (such notice to be accompanied by
copies of invoices, shipping manifests and other relevant documentation supporting
Draxis’ claim for payment); provided that the cumulative amount then due to
Draxis is in excess of $3,000,000 CDN, Draxis has issued to GSK written notice
of Draxis’ intent to terminate this Agreement (the “Intent to Terminate Notice”),
and GSK has not cured nonpayment within ninety (90) days of GSK’s receipt of
the Intent to Terminate Notice.

 

15.6                           Other GSK Default. “Other GSK Default” shall mean the breach
or failure by GSK with respect to any obligation, covenant, representation, warranty
or condition under this Agreement, other than a GSK Material Default, that is
not remedied by GSK within thirty (30) days after receiving written notice
thereof from Draxis, or if such breach or failure is susceptible of cure but
cannot be reasonably cured within thirty (30) days, unless GSK in good faith
promptly commences pursuing such cure and diligently and continually does so,
but in no event to exceed sixty (60) days from the date of Draxis’ notice.

 

15.7                           Effect of a GSK Default.

 

(a)                                  GSK Material Default.  Upon
the occurrence of a GSK Material Default, Draxis shall have the right to
terminate this Agreement immediately or at such other date specified under this
Agreement and to seek all other remedies available under law or in equity.

 

(b)                                 Other GSK Default.  Upon
the occurrence of an Other GSK Default, Draxis shall have no right to terminate
this Agreement, but Draxis shall have all rights to pursue all other remedies
available under law.

 

15.8                           Specified Payment Remedy.

 

(a)                                  Delivery Failure.  ***
ultimately found to have been following applicable Specifications, cGMPs and
GSK Group Quality Practices in the production of affected Products and the
affected Products are found to conform to cGMPs. ***

 

51

 

available for timely shipment pursuant to the terms
of any one Purchase Order.  GSK’s pursuit
and acceptance of any payment specified in this Section 15.8(a) shall
be deemed an election of an exclusive remedy by GSK with respect to that
delivery failure, and GSK shall thereafter have no further right to consider
that particular delivery failure for purposes of creating or constituting a
Draxis Material Default or Other Draxis Default.

 

(b)                                 Key Audit Concerns.  If
GSK observes a deficiency in Draxis’ compliance with cGMPs or quality standards
which is disclosed by GSK as a key concern in GSK’s audit report of Draxis
(each, a “Key Concern”), Draxis and GSK shall mutually agree on a process for
remedying any Key Concerns.  If any such
Key Concern is not corrected to the satisfaction of GSK within the time period
mutually agreed upon by the Parties pursuant to the foregoing sentence, Draxis’
failure to correct that Key Concern shall be a Draxis Material Default under Section 15.2(f) and
(ii) in the event that such Key Concern is not remedied within thirty (30)
days after receiving written notice from GSK, ***  GSK’s pursuit and acceptance of any payment
specified in the immediately preceding sentence shall be deemed an election of
an exclusive remedy by GSK with respect to Draxis failure to remedy within the
specified time period, and GSK shall not consider the failure to correct the
Key Concern within the time period for purposes of creating or constituting a
Draxis Material Default or other Draxis Default.  If such Key Concern is not corrected by the
audit next following the mutually agreed upon completion date, and is disclosed
by GSK as a Key Concern in that successive audit report, and Draxis and GSK
hereby agree that in the event such Key Concern is not remedied within thirty
(30) days after receiving written notice from GSK***

 

(c)                                  Nature of Payment.  The
Parties agree that (i) the agreements contained in this Section 15.8
are an integral part of the transactions contemplated by this Agreement, (ii) the
foregoing obligation constitutes a negotiated remedy to be used to compensate
GSK for damages experienced, is not a penalty, and is reasonably proportionate to
the damages actually caused by delivery failure under Section 15.8(a) and
(iii) the specified payments are necessary because the breaches described
in this Section 15.8 would result in substantial damages to GSK which may
be difficult to calculate accurately.

 

15.9                           Change in Control of Praxis.  Draxis
shall notify GSK not less than ninety (90) days in advance of any proposed
transaction or series of transactions which shall result in (i) any party
other than Draxis owning the Facility or (ii) any party other than Draxis
Health Inc. owning more than fifty percent (50%) of the outstanding voting
stock of Draxis (either, a “Proposed Change in Control Transaction”).  Notwithstanding the foregoing, if Draxis knows
or has reason to know of a Proposed Change in Control Transaction at least
ninety (90) days prior thereto, or, if such time is not commercially feasible,
within 30 days prior thereto, then Draxis shall notify GSK of the Proposed
Change in Control Transaction promptly upon Draxis learning of, or having
reason to know of, the Proposed Change in Control Transaction.  All information provided by or on behalf of Draxis
hereunder shall be “Draxis Confidential Information” subject to the provisions
of

 

52

 

Article XIII of this Agreement.  For a period of sixty (60) days after receipt
of a written notice from Draxis of a Proposed Change in Control Transaction.  GSK may elect to terminate this Agreement for
any reasonable commercial basis by providing written notice to Draxis of such
election, and any such termination shall be effective not less than three (3) months
from the date of the GSK notice of election to terminate. “Reasonable
commercial basis” may include, without limitation, issues relating to the
prospective successor’s financial resources to perform the obligations under
this Agreement and the prior experience in the manufacture of pharmaceutical
products; quality commitment in the manufacture of pharmaceutical products and
otherwise; overall reputation in its commercial dealings, including without
limitation in the manufacture of pharmaceutical products; course of prior
dealings with GSK and the prospective successors; competing lines of business
or manufacture of products competing with GSK’s products, and the like.  GSK shall include with such notice a brief
description of its basis for termination, but GSK shall have no obligation to
make any disclosure under this Section 15.9 that could jeopardize or
impair any of GSK’s business or commercial interests or relationships.  Failure of GSK to notify Draxis of its
election to terminate within sixty (60) days of receipt of a written notice
from Draxis of a Proposed Change in Control Transaction will be deemed a waiver
by GSK of its right to terminate, but GSK’s right to terminate this Agreement
with respect to a given Proposed Change in Control Transaction shall be
reinstated, if Draxis provides GSK with a written notice of a Proposed Change
in Control Transaction, and such Proposed Change in Control in Transaction is
not consummated within 180 days of deliver of such notice by Draxis.

 

15.10                     Remedies.  Except as expressly set forth
in this Agreement, none of the remedies set forth in this Agreement are
intended to be exclusive, and each Party shall have available to it all
remedies available under law or in equity.  The Parties specifically acknowledge and agree
that GSK will have available the remedy of specific performance under this
Agreement upon a Draxis Material Default.

 

15.11                     Injunctive Relief.  In
the event that either Draxis or GSK breaches or threatens to breach any
provision of Article VII, Article XIII or Article XVI of this
Agreement, the Parties presume that irreparable harm to the other Party should
be presumed and the damage to such Party would probably be very difficult to
ascertain and would be inadequate.  Accordingly,
in the event of such circumstances, each of Draxis and GSK agree that, in
addition to any other right and remedies available at law or in equity, the
other Party shall have the right to obtain injunctive relief from any court of
competent jurisdiction.

 

Article XVI

Noncompete

 

16.1                           Covenant Not to Compete.  With
respect to each of the Products, Draxis ***

 

 

 

53

 

***

 

16.2                           Period of Restriction.  For
each of the Products, Draxis’ obligations under this Article XVI shall
remain in effect until *** following the expiration of this Agreement.

 

16.3                           Prohibited Markets.  For
each of the Products, the restrictions under Sections 16.1 and 16.2 above shall
apply only in those geographical markets identified on Schedule 2.1
to the Specific Product Supplement(s) (each, a “Prohibited Market”).

 

Article XVII

Miscellaneous

 

17.1                           Standard Forms.  In
all communications, GSK and Draxis may employ their standard forms, but nothing
in those forms shall be construed to modify or amend the terms and conditions of
this Agreement, and, in the case of any conflict herewith, the terms and
conditions of this Agreement shall control.

 

17.2                           Notices.  In addition to the other
specific procedures for notification required herein, all notices, demands,
requests and other communications made hereunder shall be in writing and shall
be given either by personal delivery, by nationally recognized overnight
courier (with charges prepaid), by electronic transmission (provided such
transmission shall include information from which it can be determined that it
was authorized by a Party hereto and the receipt of such transmission is
confirmed by telephone) or by facsimile transmission (with telephone confirmation),
and shall be deemed to have been given or made: (i) if personally delivered,
on the day of such delivery; (ii) if sent by overnight courier, on the day
following the date deposited with

 

54

 

such overnight courier service; (iii) if by electronic
transmission, on the date transmitted on such electronic medium; or (iv) if
by facsimile transmission, on the date transmitted to receiving facsimile
machine and confirmed by telephone, in each case pending the designation of
another address, addressed as follows:

 

If to GSK:

 

GlaxoSmithKline Inc.

7333 Mississauga Rd. N.

Mississauga, Ontario L5N 6L4

 

	
  Attention:

  	
   

  	
  Site
  Technical Director, Kenn Lendrum

  
	
  Facsimile:

  	
   

  	
  905-819-3481

  

 

and

 

GlaxoSmithKline Inc.

7333 Mississauga Rd. N.

Mississauga, Ontario L5N 6L4

 

	
  Attention:

  	
   

  	
  Site
  Implementation Manager, Darrell Black

  
	
  Facsimile:

  	
   

  	
  (905)
  819-3445

  

 

and

 

GlaxoSmithKline Inc.

7333 Mississauga Rd. N.

Mississauga, Ontario L5N 6L4

 

	
  Attention:

  	
   

  	
  General
  Counsel, Patrick McGrade

  
	
  Facsimile:

  	
   

  	
  (905)
  819-3087

  

 

and

 

	
  Attention:

  	
   

  	
  Any
  other Person to whom notice is to be directed as provided in this Agreement
  at the address set forth above.

  

 

With a copy (which shall not constitute notice) to:

 

GlaxoSmithKline

One Franklin Plaza

Philadelphia, PA 19101

 

	
  Attention:

  	
   

  	
  General
  Counsel and Paul Noll

  
	
  Facsimile:

  	
   

  	
  (215)
  751-4184

  

 

55

 

If to Draxis:

 

Draxis Pharma, Inc.

16751 Route Transcanadienne

Trans-Canada Road

Kirkland Quebec H9H 4J4

 

	
  Attention:

  	
   

  	
  Dwight
  Gorham, President

  
	
  Facsimile:

  	
   

  	
  (514)
  694-3841

  

 

With a copy (which shall not constitute notice) to:

 

Draxis Health Inc.

6870 Goreway Drive, 2nd Floor

Mississauga, Ontario L4V 1P1

 

	
  Attention:

  	
   

  	
  General
  Counsel & Secretary, Douglas M. Parker

  
	
  Facsimile:

  	
   

  	
  (905)
  677-5494

  

 

17.3                           Independent Contractors.  In
the exercise of its obligations and in respect of its rights and entitlements
hereunder or in respect hereof, Draxis is and shall in all respects be treated as
an independent contractor of GSK.  Neither
Party shall be deemed to be a co-venturer or partner of the other.  Neither Party is an employee or a legal
representative 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.

 

17.4                           Entire Understanding.  This
Agreement, including the Schedules and Exhibits, including without limitation,
each Specific Product Supplement and all the Schedules thereto and any other
document identified herein or therein, represents the entire understanding and
agreement between the Parties hereto with respect to the subject matter hereof,
and supersedes all prior and contemporaneous agreements and understandings
between the Parties with respect to such subject matter, which are hereby
expressly terminated.

 

17.5                           Unintentional Omissions.  The
Parties acknowledge that they have expended substantial effort in preparing
this Agreement and attempting to describe, in the Schedules and Exhibits, as
thoroughly and precisely as possible, Specifications, Products, and other
information.  However, despite these efforts,
the Parties acknowledge the possibility of involuntary or inadvertent omissions
from the Schedules.  The Parties will
agree in writing to the changes to be made to the Schedules to add these
inadvertent or involuntary omissions and any such written agreement executed by
the Parties shall serve as an amendment to this Agreement.

 

17.6                           Transferability; Binding Effect.

 

(a)                                  Neither this Agreement, nor any of the rights
or obligations of Draxis may be directly or indirectly assigned, sold,
delegated or otherwise disposed of by Draxis without the prior written consent
of GSK, which consent may not be unreasonably withheld;

 

56

 

provided, however, that (i) Draxis may assign this Agreement to a
successor by merger, acquisition, or sale of all or substantially all of such
Draxis’ business assets in the field to which this Agreement relates, without
GSK’s consent, and (ii) Draxis shall have the right to assign this
Agreement in its entirety to an Affiliate of Draxis, if the successor or
Affiliate:

 

(i)                                     shall agree in writing to assume Draxis’
obligations under this Agreement and to be bound by all the terms and
provisions of this Agreement, including without limitation the noncompetition
provisions of Article XVI;

 

(ii)                                  is not at the time of the assignment of this
Agreement engaged, directly or indirectly, for itself, through any affiliate,
or any other Person, in the manufacture, sale, distribution or marketing of any
(a) generic equivalent of any Product or (b) any congener of a
Product;

 

(iii)                               is experienced in or has, or will have as a
condition to such assignment, senior and operating management, together with
personnel retained at the Facility, who are experienced in pharmaceutical
manufacturing under cGMPs of secondary dosage forms;

 

(iv)                              has sufficient financial resources and
liquidity (including lines of credit) to satisfy the requirements for working
capital necessary to operate the Facility in the manner required to manufacture
and supply Products and perform all the obligations of Draxis under this
Agreement;

 

(v)                                 is in good standing with the Regulatory
Authorities of any jurisdiction contemplated for the shipment of Products and
has for the five (5) year period prior to the assignment of this Agreement
a satisfactory record of regulatory compliance with such other Regulatory
Authorities, except to the extent any noncompliance would not reasonably be
expected to have a material adverse effect on the ability of such Permitted
Transferee to operate pharmaceutical manufacturing facility; and

 

(vi)                              is not, and has no affiliate that is, at the
time of assignment or during any time within the two (2) year period prior
thereto, engaged in any litigation or arbitration involving GSK or any GSK
Affiliate involving claims, or Products with annual revenues.

 

(b)                                 GSK may assign its rights and duties under
this Agreement without Draxis’ prior consent; provided, however, that GSK may
not assign any right to claim lost profits or consequential damages, or to
assert the special payment remedy set forth in Section 15.8 above, against
Draxis for intentional misconduct or gross negligence to a Third Party.

 

17.7                            Dispute Resolution.  If
the Parties fail to resolve any claim, dispute, or controversy of whatever
nature arising out of or relating to this Agreement (other than one relating to
the validity, enforceability, infringement or misappropriation of Intellectual
Property Rights, which shall not be

 

57

 

subject in this Section 17.7). or concerning the interpretation,
effect, termination, validity, performance and/or breach of this Agreement (a “Claim”),
either Party may refer the dispute, by notice to the other Party, to their
respective officers designated below or such other officers as the Parties may
designate in writing from time to time, for attempted resolution by good faith
negotiations within thirty (30) days after that notice is received.  The designated officers are as follows:

 

	
  For
  GSK:

  	
   

  	
  Head
  of Global Manufacturing and Supply

  
	
   

  	
   

  	
  North
  American Third Party Contract

  
	
   

  	
   

  	
  Manufacturing/Procurement

  

 

	
  For
  Draxis:

  	
   

  	
  Dwight
  Gorham

  
	
   

  	
   

  	
  President

  

 

If the designated officers are not able to resolve such dispute within
the thirty (30) day period or such other period of time as the Parties may
mutually agree in writing, the Parties will attempt to resolve such dispute in
good faith within a period not to exceed (30) days by mediation administered by
the ADR Chambers or any successor thereto pursuant to its appropriate rules or
regulations for non-binding mediation of commercial disputes.  Any mediation proceeding under this Section 17.7
shall be conducted in Toronto, Ontario or such other place as the Parties may
mutually agree.  The cost of mediation
filing, hearing fees, and costs of the mediator shall be shared equally by the
Parties.  Each Party will bear its own
attorneys’ fees and other costs and expenses.

 

17.8                           Subcontractors. 
Draxis may utilize subcontractors with appropriate expertise and experience
in the performance of its obligations under this Agreement; provided, however,
that (i) Draxis may not subcontract to Third Parties manufacturing or
packaging functions in connection with the Products and (ii) GSK must give
its written approval, which shall not be unreasonably withheld, prior to the
use of subcontractors by Draxis.  Any
services identified on Schedule 17.8 to the applicable Specific
Product Supplement may be performed by subcontractors in accordance with the
blanket consent of GSK given in accordance with that Schedule.  All subcontractors employed by Draxis in
connection with the supply of the Products shall be bound by Draxis’ obligations
pursuant to this Agreement, including without limitation, the confidentiality
provisions of Article XIII, and Draxis agrees to inform all subcontractors
of such obligations.  Nothing in this Section 17.8
shall relieve Draxis from any obligation under this Agreement.  Prior to the commencement of services in
connection with any Product at the Facility, each Subcontractor shall sign a
confidentiality agreement containing substantially those terms provided in Article XIII.

 

17.9                           Amendment.  Any amendment, modification or
supplement of or to any provision of this Agreement, including the Schedules
and Exhibits hereto, including without limitation, any Specific Product
Supplement hereto and the Schedules to each Specific Product Supplement, shall be
effective only in a writing and signed by a duly authorized officer of suitable
title of all Parties hereto.  The Parties
hereto waive the right to amend the provisions of this Section 17.9
orally.

 

17.10                     Severability.  If
and to the extent that any court of competent jurisdiction holds any provision
(or any part thereof) of this Agreement to be invalid or unenforceable, such
holding shall

 

58

 

in
no way affect the validity or enforceability of the remainder of this
Agreement, and the invalid or unenforceable provision shall be fully severed
from this Agreement and there shall automatically be added in lieu thereof a
provision as similar in terms and intent to such severed provision as may be
legal, valid and enforceable.

 

17.11                     Waiver.  Any failure of Draxis or GSK
to comply with any obligation, covenant, agreement or condition herein
contained may be expressly waived, in writing only, by the other Party hereto
and such waiver shall be effective only in the specific instance and for the
specific purpose for which made or given.

 

17.12                     Survival.  Article X, Article XI,
Article XIII, Article XVI and Sections 7.1, 7.2, 7.5, 8.4, 15.1,
15.4, 15.7, 15.11, 17.1, 17.2, 17.3, 17.4, 17.5, 17.6, 17.7, 17.9 and 17.15,
any portion of a Specific Product Supplement relating to any of the enumerated
sections, and any other provision which by its terms specifically shall so
state, together with any obligation to make accrued but unpaid payments due
hereunder, shall survive the termination or expiration of this Agreement until
the last-to-expire of the longest statute of limitations governing any claims
relating to the performance of this Agreement.

 

17.13                     Drafting Ambiguities.  Each
Party to this Agreement and its counsel have reviewed and revised this
Agreement.  The rule of construction
to the effect that any ambiguities are to be resolved against the drafting
Party shall not be employed in the interpretation of this Agreement or any
amendment or Schedule to this Agreement.

 

17.14                     Headings; Schedules; Exhibits; Counterparts.

 

(a)                                  Headings.  The headings of the Sections
of this Agreement are for reference purposes only, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.

 

(b)                                 Schedules.  All Schedules delivered
pursuant to this Agreement shall be deemed part of this Agreement and
incorporated herein by reference, as if fully set forth herein.  All provisions contained in any Schedule delivered
by or on behalf of the Parties hereto, or in connection with the transactions
contemplated hereby, are an integral part of this Agreement.

 

(c)                                  Exhibits.  All Exhibits, and Schedules
thereto, delivered pursuant to this Agreement shall be deemed part of this
Agreement and incorporated herein by reference, as if fully set forth herein.  All provisions contained in any Exhibit, or Schedule thereto,
delivered by or on behalf of the Parties hereto, or in connection with the
transactions contemplated hereby, are an integral part of this Agreement.

 

(d)                                 Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument.

 

59

 

17.15                   Governing Law.  This
Agreement shall be governed, construed and enforced in accordance with the laws
of the Province of Ontario, Canada applicable therein without regard to principles
of conflicts of law and the Parties hereby irrevocably consent to the
jurisdiction of the courts of the Province of Ontario.

 

17.16                   Language.  The Parties declare that they
have requested and do hereby confirm their request that this Agreement, and
related documents including without limitation all Statements of Work and
Schedules and attachments thereto, be in English.  Les parties déclarent qu’elles ont éxigé et
par les préséntes confirment leur demande que le present contrat ainsi que les
documents qui s’y rattachent, soient rédigés en anglais.

 

[Remainder of Page Intentionally Left Blank]

 

60

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement
to be duly executed as of the date first written above.

 

 

	
   

  	
  GLAXOSMITHKLINE
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kenneth C. Lendrum

  
	
   

  	
  Name:

  	
  KENNETH C. LENDRUM

  
	
   

  	
  Title:

  	
  VICE PRESIDENT GLOBAL
  MANUFACTURING 

  
	
   

  	
   

  	
  AND SUPPLY CANADA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DRAXIS
  PHARMA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dwight Gorhan

  
	
   

  	
  Name:

  	
  DWIGHT GORHAN

  
	
   

  	
  Title:

  	
  PRESIDENT

  

 

61

 

SCHEDULES TO AGREEMENT

 

	
  2.5

  	
   

  	
  Key Performance Indicators

  
	
  2.6

  	
   

  	
  Monthly Reports

  
	
  3.3

  	
   

  	
  Volume Plan

  
	
  4.2(a)

  	
   

  	
  Schedule of Rates

  
	
  4.3

  	
   

  	
  Change Control Operating Procedure

  
	
  4.10(c)

  	
   

  	
  Health, Safety and Environment Guidelines

  
	
  10.1(i)

  	
   

  	
  Security Policy

  
	
  12.1

  	
   

  	
  Required Insurance Coverages

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