Document:

Exhibit 4.67

 

DRAXIS
HEALTH INC.

 

TERMS
OF REFERENCE FOR 

THE CHIEF EXECUTIVE OFFICER

 

	
  Title:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Reports to:

  	
   

  	
  The Board of Directors (“Board”) of the Corporation and maintains
  open communication with the Chair of the Board.

  
	
   

  	
   

  	
   

  
	
  Function:

  	
   

  	
  Provides overall leadership and vision in developing, in concert with
  the Board, the strategic direction of the Corporation, and in developing the
  strategies and business plans necessary to realize corporate objectives.

  

 

Manages the overall business to ensure strategic and
business plans are effectively implemented, the results are monitored and
reported to the Board, and financial and operational objectives are attained.

 

Key
Authorities and Responsibilities:

 

A.                                    General Functions

 

1.                                       Provides effective leadership to the
management and the employees of the Corporation and establishes an effective
means of control and co-ordination for all operations and activities.

 

2.                                       Fosters a corporate culture that promotes
ethical practices, integrity and a positive work climate, enabling the
Corporation to attract, retain and motivate quality employees.

 

3.                                       Keeps the Board fully informed on all key
aspects of the Corporation’s operational and financial affairs, and on all
matters of significant relevance to the Corporation.  This includes external items emanating from
governments and regulators on issues such as fiscal and monetary policies,
legislation, etc.

 

4.                                       Develops and maintains a sound, effective
organizational structure and implements programs to address management
succession issues.  Reports regularly to
the Board on these matters and officers’ performance.

 

5.                                       Ensures that effective communications and
appropriate relationships are maintained with the shareholders of the
Corporation, other stakeholders and the media.

 

6.                                       Develops annual operating and capital
commitment and capital expenditure budgets for approval by the Board.

 

7.                                       Meets periodically with the Chair of the
Board to optimize the liaison function and ensure efficient communication
between management and the Board.

 

 

 

B.                                    Strategy/Risks

 

1.                                       Develops and recommends to the Board
strategic plans to ensure the Corporation’s profitable growth and overall
success.  This includes updating and
making changes to strategic plans as required and involving the Board in the
early stages of developing strategy.

 

2.                                       Identifies, in conjunction with other
senior officers, the key risks with respect to the Corporation and its
businesses and reviews such risks and strategies for risk management with the
Board.

 

3.                                       Ensures that procedures and processes are
implemented to adequately safeguard and maintain the assets of the Corporation.

 

C.                                    Financial Reporting

 

1.                                       Oversees the quality and timeliness of
financial reporting.  Reports to the
Board, in conjunction with the Chief Financial Officer, on the fairness and
adequacy of the financial reporting of the Corporation to its Shareholders.

 

2.                                       Ensures, in conjunction with the Chief
Financial Officer, that the annual and interim filings of the Corporation
contain full and accurate disclosure and that the annual and interim financial
statements and the comments thereto fairly present, in all material respects,
the financial condition, results of operations and cash flows of the
Corporation , and provides any related certifications required by applicable
legislation or corporate governance rules.

 

3.                                       Supervises the design of, implements,
maintains and periodically evaluates, in conjunction with the Chief Financial
Officer, the effectiveness of (i) internal controls to provide reasonable
assurances that the financial statements of the Corporation are fairly
presented in accordance with generally accepted accounting principles and (ii) disclosure
controls and procedures to provide reasonable assurances that material information
relating to the Corporation is made known to the Chief Executive Officer by
others within the Corporation.  Reports
any deficiencies in such controls and procedures to the Audit Committee.

 

 

 

2Exhibit 4.68

 

MANUFACTURE AND SUPPLY AGREEMENT

 

BETWEEN

 

DRAXIS PHARMA,

A division of DRAXIS SPECIALTY
PHARMACEUTICALS INC.

 

AND JOHNSON & JOHNSON CONSUMER
COMPANIES, INC.

 

AS OF SEPTEMBER 4, 2007

 

 

	
  ARTICLE 1 - – DEFINITIONS

  	
  3

  
	
   

  	
   

  
	
  ARTICLE 2 - TECHNICAL TRANSFER; SUPPLY OF
  PRODUCT

  	
  8

  
	
   

  	
   

  
	
  ARTICLE 3 - PRICES FOR PRODUCT AND ***

  	
  9

  
	
   

  	
   

  
	
  ARTICLE 4 - FORECASTS; ORDERS; SUPPLIERS;
  RAW MATERIAL TRANSPORTATION

  	
  14

  
	
   

  	
   

  
	
  ARTICLE 5 - ADDITIONAL UNDERSTANDINGS OF
  THE PARTIES

  	
  20

  
	
   

  	
   

  
	
  ARTICLE 6 - IMPROVEMENTS AND CHANGES TO PRODUCTS

  	
  25

  
	
   

  	
   

  
	
  ARTICLE 7 - TERM

  	
  26

  
	
   

  	
   

  
	
  ARTICLE 8 - TERMINATION

  	
  27

  
	
   

  	
   

  
	
  ARTICLE 9 - DELIVERY; INVENTORY

  	
  30

  
	
   

  	
   

  
	
  ARTICLE 10 - INSPECTION

  	
  32

  
	
   

  	
   

  
	
  ARTICLE 11 - QUALITY/LABEL
  VERIFICATION/DEFECTIVE PRODUCT/INSPECTIONS/TESTING

  	
  33

  
	
   

  	
   

  
	
  ARTICLE 12 - FAILURE TO SUPPLY; FORCE
  MAJEURE

  	
  39

  
	
   

  	
   

  
	
  ARTICLE 13 - INSURANCE

  	
  41

  
	
   

  	
   

  
	
  ARTICLE 14 - LABELING; ARTWORK; PROPRIETARY
  RIGHTS

  	
  42

  
	
   

  	
   

  
	
  ARTICLE 15 - CONFIDENTIALITY

  	
  43

  

 

 

	
  ARTICLE 16 - PUBLIC ANNOUNCEMENTS

  	
  43

  
	
   

  	
   

  
	
  ARTICLE 17 - REPRESENTATIONS AND WARRANTIES

  	
  45

  
	
   

  	
   

  
	
  ARTICLE 18 - COMPLIANCE

  	
  47

  
	
   

  	
   

  
	
  ARTICLE 19 - INDEMNIFICATION

  	
  48

  
	
   

  	
   

  
	
  ARTICLE 20 - MISCELLANEOUS

  	
  50

  

 

2

 

MANUFACTURING
AND SUPPLY AGREEMENT

 

This Manufacturing and Supply Agreement (the “Agreement”), is entered
into as of September 4, 2007 (the “Effective Date”), by and between
Johnson & Johnson Consumer Companies, Inc., a New Jersey
corporation (“Buyer”), and DRAXIS Pharma, a division of DRAXIS Specialty
Pharmaceuticals Inc., a Canadian corporation (“Manufacturer”).  Buyer and Manufacturer are each a “Party” and
are collectively, the “Parties”.

 

WHEREAS, Buyer has certain Products (as hereinafter defined) which it
desires to have manufactured for it;

 

WHEREAS, Manufacturer is in the business of manufacturing products;

 

WHEREAS, Buyer desires to have
Manufacturer manufacture the Products pursuant to the terms of this Agreement;
and

 

WHEREAS, Manufacturer desires to manufacture such Products for Buyer
pursuant to the terms of this Agreement in exchange for a Price (as hereinafter
defined) for each such Product.

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE 1 -– DEFINITIONS

 

As used throughout this Agreement, each of the following terms shall
have the respective meaning set forth below:

 

1.01         ***

 

1.02         “Affiliate”
of a Party means any entity which directly or indirectly controls, is
controlled by or is under common control with such Party.

 

3

 

1.03         “Business
Day” or “Business Days” means any day other than Saturday, Sunday or a holiday
generally recognized in Canada or the United States.

 

1.04         “Buyer
Intellectual Property” means any and all Intellectual Property relating to the
Products or their formulation that was (i) owned by Buyer at the Effective
Date or (ii) was developed or acquired after the Effective Date.  Buyer Intellectual Property does not include
Manufacturer IP.

 

1.05         “Carrier(s)”
shall mean third parties that transport Raw Materials to the Facility and
includes both Directed Materials Carrier(s) and Other Materials Carriers.

 

1.06         “cGMPs”
mean the current Good Manufacturing Practices stipulated or promulgated from
time to time by Regulatory Authorities (as hereinafter defined) that are
applicable to the manufacturing, production and supply of a Product in the
Territory (as hereinafter defined).

 

1.07         “Confidential
Information” shall include all confidential or proprietary information given to
one Party by the other Party, or otherwise acquired by such Party in its
performance of this Agreement, relating to such other Party or any of its
Affiliates, including information regarding any of the products of such other
Party or any of its Affiliates, information regarding its advertising,
distribution, marketing or strategic plans or information regarding its costs,
productivity or technological advances, information regarding the Price of the
Products, and the terms of this Agreement.

 

1.08         ***

 

1.09         ***

 

1.10         “Currency”
means US Dollars.

 

1.11         “Damages”
shall mean any and all direct damages, liabilities, claims, costs, charges,
judgments and expenses (including reasonable attorneys’ fees).

 

4

 

1.12         “Directed
Suppliers” or “Directed Materials Carriers” shall mean any Supplier that Buyer
has specified to be used for Raw Materials or Transportation of Raw Materials
to the Manufacturer.

 

1.13         ***

 

1.14         “Facilities”
shall mean the buildings and locations approved by the Buyer where the
Manufacturer will store Raw Materials and produce Product for the Buyer which
shall be the facility located at 16751 Trans-Canada Highway in Montreal,
Quebec  H9H 4J4 and the secondary
packaging facility to be located in the Province of Québec.

 

1.15         “Facilities’
Improvements” shall mean the structural improvements to the actual physical
Facilities (e.g., moving walls, heating, etc.) required to support
manufacturing of Buyer’s Products as agreed upon with Buyer.  ***.

 

1.16         “FDA”
means the United States Food and Drug Administration, or any successor to it.

 

1.17         ***

 

1.18         “HPFBI”
means the Health Products and Food Branch Inspectorate of Health Canada, or any
successor to it.

 

1.19         “Improvement(s)”
means any change, improvement, modification or development to the Products, the
Specifications, the Raw Materials or the method or process of manufacture or
production of the Products.

 

1.20         “Intellectual
Property” shall mean the intellectual property, trade secrets, know how,
technology and information, whether or not protected by patents, including any
Improvements to any Product, that are required in order to make any Product.

 

1.21         “Manufacturer
IP” means all intellectual property, trade secrets, know-how, technology and
information, whether or not protected by patents, owned by Manufacturer prior
to and as of the Effective Date and all intellectual property, trade secrets,
know-how, 

 

5

 

technology and information, whether or not protected by patents, solely
developed by or solely acquired by Manufacturer after the Effective Date
independent of the performance of its obligations under this Agreement; and
provided that such intellectual property does not utilize nor is it based upon
any Buyer Intellectual Property; and provided further such Manufacturer IP is
not used to make the Product.

 

1.22         ***.

 

1.23         ***

 

1.24         “Other
Suppliers” or “Other Materials Carriers” shall mean any supplier that the
Manufacturer has specified to be used for Raw Materials or Transportation of
Raw Materials to the Manufacturer.

 

1.25         “Price”
means on a Product by Product basis the sum of the ***, the appropriate Raw
Materials Price, the ***, the ***, and the Transportation Cost, if any, as
applicable to such Product.

 

1.26         “Product”
shall mean each of those products (in final finished form) set forth on Schedule
A to this Agreement attached hereto and incorporated herein, manufactured
and packaged in accordance with the Specifications (hereinafter defined).

 

1.27         “Quality
Agreement” means the agreement executed by the Parties on May 15, 2007  and attached hereto as Schedule B and
incorporated herein  and which sets
forth certain obligations and responsibilities each Party has with respect to
certain quality provisions and procedures, as such may be amended or replaced
from time to time by mutual written agreement of the Parties.

 

1.28         “Raw
Materials” shall mean all the materials, chemicals, components, and packaging
required to manufacture and package the Products in accordance with the
Specifications.

 

6

 

1.29         “Raw
Materials Price” shall mean the price that Manufacturer shall charge Buyer for
the cost of Raw Materials as set forth on Schedule C hereto.  The Raw Materials Price for any specific Raw
Material from a Directed Supplier shall be the DPB Price and the Other Supplier
Price with respect to Other Suppliers.

 

1.30         “Regulatory
Authority” means all governmental agencies or authorities regulating the
manufacture, packaging, sale, shipment or storage of any Product in the
Territory.

 

1.31         “Specifications”
mean the specifications for each Product and the Raw Materials, including,
without limitation, the specifications for the design, composition, product
safety assurance, manufacture, packaging and quality control of the Products
and the Raw Materials, as set forth in Buyer’s global specification system (or
such future system that Buyer implements)and as supplied to the Manufacturer on
the Effective Date and as the same may hereafter be modified by Buyer in
accordance with Section 5.05 or Article 6.

 

1.32         “Supplier”
means third parties who sell Raw Materials to the Manufacturer and includes
both Directed Suppliers and Other Suppliers

 

1.33         ***

 

1.34         ***

 

1.35         “Technical
Transfer Program” shall mean the series of efforts by which the Product is
transferred from site where Product was manufactured prior to the Effective
Date to the Facilities.  This work and
these efforts include, but are not limited to: 
transfer of testing methods; Product process development and
manufacturing of Products; optimization of the manufacturing process;
generating all protocols and reports; and any other activities associated with
the transfer of Product.   The Technical
Transfer Program will be determined successful and completed upon receipt of
approval from the FDA and Health Canada for the manufacturing site change and
the FDA’s and Health Canada’s approval of the manufacturing processes for all
the Products and the Buyer’s approval of the Products produced during Validation.

 

7

 

1.36         “Territory”
means United States and Canada.

 

1.37         “Transportation
Cost” shall have the meaning set forth in Section 3.06.

 

1.38         “Validation”
means all activities associated with verifying that the manufacturing systems,
equipment, processes and facilities produce Product that consistently meets
Buyer Specifications, and in accordance with cGMPs.

 

ARTICLE 2 - TECHNICAL TRANSFER; SUPPLY OF
PRODUCT

 

2.01         Technical
Transfer Program.  Prior to the Supply
of Product hereunder, Manufacturer will implement and complete, to Buyer’s
satisfaction, the Technical Transfer Program. 
In connection with such efforts, Manufacturer shall, including without
limitation, do the following:

 

(a)           Technical
Transfer Resources.  Manufacturer
will secure and make available the services of a sufficient number of its
qualified personnel to perform tasks related to the Technical Transfer Program
to the satisfaction of Buyer and to ensure satisfaction of the timelines set
forth in Schedule F (the “Technical Transfer Timelines”).  Manufacturer shall prioritize the
availability of such personnel for the Technical Transfer Program over other
projects and commitments that Manufacturer may have either internally or with
third parties.  Manufacturer will use
diligent efforts to execute the work plans associated with the Technical
Transfer Program and shall report any anticipated or actual significant
deviations therefrom as soon as possible. 
Such reporting shall not waive any other rights and remedies available
to Buyer in connection with such failure by Manufacturer.  The Parties shall participate in periodic
conferences to review the status of the Technical Transfer Program.  It is agreed by the Buyer that any delay by
Manufacturer to meet said timelines will not be deemed a breach by Buyer.

 

(b)  Activities and Deliverables.  Manufacturer shall perform the activities and
provide the deliverables as set forth in Schedule F.   Manufacturer and Buyer shall jointly work 

 

8

 

towards achieving key milestones as outlined in Schedule F. Changes to
key milestone dates shall be jointly agreed upon by Buyer and Manufacturer.

 

(c)  Qualification of Equipment:  Manufacturer shall order, receive and qualify
all Equipment required to manufacture, test or package Product in a timely
manner that supports transfer of Products to Manufacturer in accordance with
the schedule set forth on Schedule  F.   For the avoidance of doubt, the Manufacturer
will finance the purchase of the Equipment through *** and such amount shall
not be incorporated into, or combined with, the ***.

 

(d) ***

 

2.02  Supply of Product.  During the Term of this Agreement and subject
to the terms herein, Manufacturer shall manufacture, package and supply Buyer
with those quantities of Product as ordered by Buyer and on the date specified
by Buyer, and Buyer shall purchase from Manufacturer such quantities of
Products, subject to the ordering procedures set forth in Article 4 and
the provisions set forth in Section 12.02. 
Both Parties agree to collaborate to implement (1) an integrated
replenishment planning process that closely links supply and marketplace demand
and (2) a weekly schedule attainment performance metric. Buyer agrees that
it shall pay for any software or other resource required if the integrated
replenishment planning process is an automated one.

 

ARTICLE 3 - PRICES FOR PRODUCT AND ***

 

3.01         Price and Other
Fees.  Throughout the Term of the
Agreement, Manufacturer shall invoice Buyer the Price for each Product ordered
and delivered to Buyer in accordance with the terms herein.   Manufacturer shall also invoice Buyer for
the *** and  ***  separate from Price in accordance with the
terms herein.

 

3.02         ***

 

(a) ***

 

(b) ***

 

9

 

3.03  Raw Materials Price.  The price that Manufacturer shall charge
Buyer for the cost of the Raw Materials purchased from the Directed Suppliers
is the designated price set forth on Schedule C  (each a “DPB Price”).  *** 
Once Buyer has finalized the pricing for the Raw Materials to be
purchased from Directed Suppliers: (a) Buyer shall amend Schedule C
accordingly to reflect such prices, (b) such pricing shall be effective
immediately upon Buyer’s completion of Schedule C, and (c) the preceding
sentence shall no longer be in effect at such time.  The price that Manufacturer shall charge
Buyer for the cost of the Raw Materials purchased from the Other Suppliers is
the designated price set forth on Schedule C (each an “Other Supplier
Price,”) as amended from time to time in accordance with the provisions of Schedule
C.  Manufacturer will not charge
Buyer for any Raw Materials that have not been incorporated into Product
delivered to Buyer in accordance with Article 4, or which Raw Materials
were not purchased in accordance with Section 4.04(a).  The Raw Materials Prices are subject to
adjustment as expressly provided herein.

 

3.04         ***

 

3.05         ***

 

3.06         Transportation
Cost.  The cost that the Manufacturer
shall charge Buyer for the transportation of Raw Materials to, from or within
its Facilities, if any, is the amount set forth on Schedule C.  The cost that Manufacturer shall charge Buyer
for the transportation of Raw Materials is calculated as a percentage of the
Raw Material Cost.  For greater clarity,
all shipment of Products to Buyer shall be at the sole cost of the Buyer as set
forth in Section 11.12(a).

 

10

 

3.07         ***

 

3.08         Price Adjustments.

 

(a) Price Adjustments for Actual Costs Raw Materials and
Transportation Costs.

 

(i)            Directed Suppliers, and Directed Materials Carriers.  In the event a Directed Supplier or Directed
Materials Carrier seeks to adjust the cost to Manufacturer of the Raw Materials
or the cost of transporting such Raw Materials, as the case may be, the
Manufacturer shall notify Buyer prior to the purchase or transportation of such
Raw Materials at an adjusted price. 
Manufacturer shall not purchase or transport such Raw Materials at the
adjusted price unless (x) Buyer provides its prior written approval to
Manufacturer to purchase or transport, as applicable, such Raw Materials at
such new price or (y) Manufacturer can substantiate to Buyer that
Manufacturer was required to purchase or transport such Raw Material in advance
of Buyer’s approval to fulfill Buyer’s applicable Purchase Orders or forecasted
but not yet ordered Product and avoid a delay in Buyer’s requested delivery
date of Product.  Manufacturer will not
purchase any such Other Supplier Raw Material for which there is not yet an
agreed upon price set forth on Schedule C, unless (x) Buyer
provides its prior written approval to purchase such Raw Materials at a
particular price or (y) Manufacturer can substantiate to Buyer that
Manufacturer was required to purchase such Raw Material in advance of Buyer’s
approval to fulfill Buyer’s applicable Purchase Orders or forecasted but not
yet ordered Product and avoid a delay in delivering Product to Buyer in
accordance with Buyer’s requested delivery date of Product.

 

(ii)           ***

 

(iii)          ***

 

(iv)          ***

 

(b)           Adjustments
to the Raw Materials Price. 
Annually, Buyer may notify Manufacturer of adjustments to the DPB Prices
and the Parties shall execute an amendment to this Agreement adjusting Schedule
C accordingly.  Annually, the Parties
shall consider any adjustment to the Other Supplier Prices proposed by
Manufacturer, only if Manufacturer has negotiated in good faith with its
suppliers to obtain a fair market price for such Raw Materials.  

 

11

 

Upon Buyer’s written request,
Manufacturer shall provide Buyer with written documentation that supports and
verifies the basis for any such adjustment. 
In furtherance of this Section 3.08, Buyer may also produce written
verifiable documentation as to a reduction, if any, in the costs of such Raw
Materials, and the Parties shall adjust such costs accordingly.

 

(c)           ***

 

(d)           ***

 

(e)           ***

 

(f)            Adjustments to the Transportation Cost.

 

(i) Annually, the Parties will review the Transportation Costs for
Carriers.  In an effort to continually
improve price and efficiency, Buyer shall have the right at any time throughout
the year to locate a Carrier for the transportation of any of the Raw Materials
that Buyer obtains from the Directed Suppliers. 
If Buyer locates such a carrier, Buyer shall so notify Manufacturer, and
Buyer shall have the right to insist that Manufacturer utilize such Carrier,
which shall thereafter be a Directed Materials Carrier, for such Raw Materials.
The change in Carrier must be made within a mutually agreed upon time
period.    ***

 

(ii) Annually,
the Parties shall consider any proposals presented by the Manufacturer to
adjust the Transportation Costs based upon actual costs which the Carriers
charge the Manufacturer provided that Manufacturer has negotiated in good faith
with such Carriers to obtain a fair market price for the transportation of such
Raw Materials.  Upon Buyer’s written
request, Manufacturer shall provide Buyer with written documentation that
supports and verifies the basis for any such adjustment.  In furtherance of this Section 3.08,
Buyer may produce written verifiable documentation as to the reduction, if any,
in the costs of the transportation of Raw Materials and the Parties shall
adjust such costs accordingly

 

(g) ***

 

12

 

3.09  Price
for New Products.

 

(a)           In
the event Buyer has notified Manufacturer in accordance with Section 5.11
that it desires to add another product to Schedule A and Manufacturer
has indicated a willingness to negotiate the terms for such new product, the
Parties will negotiate the Price for such new product in good faith.  Manufacturer shall provide a price for each
new Product utilizing the same methodology as was used in Schedule A.  If the Parties reach mutual agreement upon
the Price and all other necessary terms, the Parties shall execute an amendment
to this Agreement amending Schedule A and Schedule C to include
such new product and Raw Materials and the corresponding Price.

 

(b)           Manufacturer shall provide product marketed
stability, product development, test method transfer and Validation for each
new Product.  The parameters of each such
product marketed stability, product development, test method transfer and
Validation shall be established and approved by Buyer. Manufacturer shall
provide a price for each new Product utilizing same methodology as used in
Schedule A.  The Buyer shall not be
responsible for paying any incremental charges in support of the product
marketed stability, product development, test method transfer and Validation of
a new or existing Product at the Facility without Buyer’s prior written
approval.

 

3.10         Payment
Terms.  Payment terms with respect to
all invoices issued between Manufacturer and Buyer in accordance with the terms
herein shall be forty-five (45) calendar days net invoice date and shall be
subject to the other terms of this Section 3.10.  Payment will be issued on the 45th
day.  Manufacturer shall remit only one
invoice in the amount of the Price for each Product shipped pursuant to the
terms herein, which invoice shall be consistent with Buyer’s format and shall
provide the level of detail as requested by Buyer.  Manufacturer shall not invoice Buyer for
Product that has been manufactured but which has either not been shipped to the
Buyer in accordance with the terms herein or has been shipped to 

 

13

 

Buyer contrary to the terms
herein, regardless of the reason. 
Manufacturer shall not issue any separate invoices to Buyer for the
components of the Price of any Product. 
To the extent Buyer disputes an invoice or any portion thereof, Buyer
shall notify Manufacturer of its dispute and shall pay only the undisputed
portion, if any, of such invoice until the settlement of the dispute.

 

3.11         ***  If the total aggregate value of conversion of
all WIP Product and Product set forth in such Forecast for such 24 month period
***.

 

3.12   ***  
The Parties recognize and agree that Affiliates of Buyer may be
executing a similar version of this Agreement. 
*** .

 

3.13 ***

 

3.14 
***

 

3.15  ***

 

ARTICLE 4 - FORECASTS; ORDERS; SUPPLIERS; RAW MATERIAL TRANSPORTATION

 

4.01                           Forecasts

 

(a)   Forecasts:  By the first week of each calendar month
during the Term, Buyer (or Buyer’s designee on behalf of Buyer) shall submit a
rolling forecast by Product as set forth on Schedule A, of Buyer’s anticipated
demand of Product for the next twelve (12) consecutive months, commencing with
the following month to which such forecast is sent (each, a “Forecast”).  The Forecast shall show demand on a monthly
basis, and for the first three months shall state the dates of delivery for
such Product.  The Forecast, including
the required delivery dates, are non-binding except for the first month of each
Forecast (the “Purchase Order”), which shall constitute a binding
purchase order for the quantity of Product stated in the Forecast for such
month and a binding date of delivery for such Product. In the event that
Manufacturer has failed to receive an updated Forecast by the first week of

 

14

 

any calendar month, Manufacturer shall notify Buyer of such failure
and, if Buyer has not responded with an updated Forecast within five (5) Business
Days of such notice, the most recent Forecast shall be regarded as current.

 

4.02  ***

 

***

 

4.03         ***

 

(a)           ***
Order is less than one month, or if Manufacturer is unable to fulfill such orders
because a Directed Supplier is in default of supplying the Manufacturer or has
supplied Raw Materials that do not meet Specifications unless, in either case,
Directed Supplier’s default or failure is a result of Manufacturer or a problem
that the Directed Supplier is having with the Manufacturer) is a material
breach of Manufacturer’s obligations. Provided that Raw Materials and WIP
Product are available, Manufacturer will make reasonable commercial efforts in
good faith to meet delivery requests that are less than one month from the date
of issuance of a Purchase Order.

 

4.04         Raw
Materials.

 

(a) Ordering.

 

 (i)           In order for
Manufacturer to meet its obligation to supply Product under this Agreement,
Buyer and Manufacturer agree that Manufacturer must order Raw Materials in
accordance with the defined lead times *** 
Manufacturer is authorized to procure and shall be entitled to order
only those quantities of Raw Materials required to manufacture those Products
as in accordance to Section 4.02 in order that Manufacturer will be able
to comply with Buyer’s delivery dates for Buyer’s actual and such anticipated
Product requirements.  To the extent
Manufacturer must order a Raw Material to manufacture Product requested by
Buyer through a Purchase Order or anticipated Product requirements and such Raw
Material is one which the Parties have agreed Manufacturer will order in bulk
or in minimum order quantities as required 

 

15

 

by the Supplier in order to
obtain certain pricing benefits, then Manufacturer shall order not the amount
of Raw Material required solely for such particular Purchase Order or
anticipated Product requirements, but rather shall order the minimum in bulk or
whole quantity of such Raw Material (as required by the Supplier) to maintain
the favorable pricing benefits, subject to the Buyer’s consent as required.

 

(ii)           Manufacturer
agrees that it is responsible for, and shall administer the procurement of the
Raw Materials on a daily basis in accordance with the terms herein.  Manufacturer’s responsibilities in connection
with the purchasing and procurement of the Raw Materials from the Suppliers,
including Directed Suppliers, in accordance with the terms herein, shall
include, without limitation: transporting, receiving, inspecting, testing and
storing the Raw Materials; maintaining sufficient administration, working
capital, insurance, information systems, material management and supplier
metrics to track that the Supplier is delivering the quantity and quality of
Raw Materials requested by Manufacturer and such Raw Materials meet the
Specifications; ensuring that adequate supplies of Raw Materials are available
at all times throughout the Term of the Agreement, subject to the provisions of
Section 4.04(a)(i); ensuring that such Raw Materials are purchased and
procured from the appropriate Supplier; paying the Supplier in accordance with
such Supplier’s terms (and in any event not more than forty five days after
receipt of invoice from a Directed Supplier); ensuring that each Raw Material
is transported by the appropriate Carrier; paying Carriers as required; and
resolving all supply issues that arise in connection with such Supplier.  If there is a failure to supply issue with a
Directed Supplier as a result of a Directed Supplier having a Force Majeure
Event or a Directed Supplier fails to deliver the appropriate quantity and
quality of Raw Materials ***. 
Significant quality issues with a Raw Material purchased from a Directed
Supplier must be communicated to the Buyer’s Quality Assurance Department
within three (3) Business Days of the Manufacturer’s 

 

16

 

incoming inspection.   ***. 
In the event that there is no satisfactory resolution of the supply issue,
***.

 

(b) Directed Pure Buy
Program.  Manufacturer
acknowledges that the Buyer has arrangements with several suppliers for certain
Raw Materials. Schedule C sets forth a list of the Raw Materials and the
suppliers from whom Buyer has arranged such Raw Material to be purchased (each,
a “Directed Supplier”, collectively, the “Directed Suppliers”).  Manufacturer agrees (i) it will not
interfere with or impede in any manner such relationships, (ii) to
purchase each of the Raw Materials designated to be obtained from a Directed
Supplier only from such Directed Supplier, (iii) to inform the Directed
Supplier as to which Raw Materials are being purchased for incorporation into
the Products, (iv) to purchase the Raw Materials from Directed Supplier at
the DPB Price only (unless the Buyer has specifically authorized the
Manufacturer otherwise) and (v) to keep all DPB Prices confidential and to
not share such information with third parties unless required to disclose by
law, court order or order of a regulatory authority. Buyer shall negotiate the
terms of its arrangement with each Directed Supplier directly, including,
without limitation, the price that the Directed Supplier shall charge the
Manufacturer for the Raw Material and the Minimum Order Quantities.  Upon completion of such agreements and prior
to the first production of any Product using any such Raw Materials the Parties
shall execute an amendment to this Agreement amending Schedule C to
incorporate such DPB Price ***.   If
Manufacturer receives a rebate, deduction or discount for any Raw Materials
purchased from a Directed Supplier which are to be used for the Products,
Manufacturer shall make such rebate, deduction or other discount available to
Buyer in accordance with the variance calculations.  Buyer must pre-approve any change in order
pattern. ***.

 

(c)           Other
Raw Materials.

 

(i)            For
those Raw Materials listed on Schedule C which are not to be procured
from a Directed Supplier, Manufacturer shall negotiate its own agreements with 

 

17

 

suppliers of its choice for
such Raw Materials (each an “Other Supplier” and together the “Other
Suppliers”,) and shall comply with such contractual arrangements with such
Other Supplier, subject to the terms herein.   
If Manufacturer receives a rebate, deduction or discount for any such
Raw Materials to be used for the Products, Manufacturer shall make such rebate,
deduction or other discount related to the Products 100% available to Buyer.

 

(ii)           To
the extent a Raw Material for an Other Supplier is added to Schedule C
subsequent to the Effective Date, the Parties agree that Manufacturer shall
identify any such Other Supplier for such Raw Material, negotiate a purchase
price for such Raw Material and obtain the prior written approval of Buyer
before engaging or committing to use such Supplier.  If Buyer believes that such Supplier’s price
is acceptable, the Parties will execute an amendment to this Agreement,
amending Schedule C to reflect such Other Supplier Price for such Raw
Material. If Buyer believes that an Other Supplier’s price is inconsistent with
the market or is otherwise unacceptable, then Buyer shall have the opportunity
to locate its own Supplier for such Raw Material and insist that the
Manufacturer use such Supplier for the Raw Material and Buyer shall be
responsible for qualifying such Supplier at its own costs.  Buyer shall then negotiate the terms of its
arrangement with such Directed Supplier in accordance with Section 4.04(b).  Upon completion of such negotiations and
prior to the initial production of the Product (or if such Product has been
produced previously, then prior to the first production following the
adjustments made to Schedule C in accordance with Section 4.04(d))
using such Raw Material, Manufacturer and Buyer shall execute an amendment to
this Agreement, amending Schedule C to reflect that Manufacturer shall
purchase such Raw Material only through the Directed Supplier identified on the
amended Schedule C and shall charge Buyer the DPB Price.  ***.

 

(d)           Unilateral
Amendments to Schedule C.  Buyer shall be permitted to unilaterally
change Schedule C, without the approval or consent of Manufacturer in
order to, (i) 

 

18

 

to add new Raw Materials that
will be necessary or delete Raw Materials that have become obsolete, in either
case, because of a change to the Specifications or (ii) to change the
availability of a Raw Material from a Directed Supplier to an Other Supplier or
from an Other Supplier to a Directed Supplier, ***  Buyer shall send a written notice to
Manufacturer informing Manufacturer of any amendments to Schedule C and
attaching such amended Schedule C. 
Upon Manufacturer’s receipt of Buyer’s written notice and the revised Schedule
C, such Schedule C shall be so amended without the need for both
Parties to execute an amendment in accordance with Section 20.05.  In the event Buyer’s amendment reflects that
a new or currently utilized Raw Material will be available through a Directed
Supplier, Manufacturer shall negotiate terms with such Directed Supplier in
accordance with Section 4.04(b).  In
the event Buyer’s amendment reflects that a particular Raw Material will no
longer be available through a Directed Supplier or that a new Raw Material will
not be available through a Directed Supplier, then Manufacturer shall locate an
Other Supplier for such Raw Material and shall follow the selection, approval
and negotiation process as set forth in Section 4.04(c).

 

(e)  *** 
To the extent Manufacturer has purchased Raw Materials in accordance
with the requirements set forth in Section 4.04(a), but subsequent to such
purchase and prior to the conversion of such Raw Material into Product or WIP
Product, ***.

 

(f)  ***

 

(g)Transportation of
Raw Materials.

 

(i)             Prior
to the initial purchase of any Raw Material from a Directed Supplier, Buyer
shall have the option of specifying a Carrier who will transport such Raw
Material to the Facility (a “Directed Materials Carrier”). The Manufacturer
shall negotiate it’s own agreements with the Carrier that is responsible for
transporting such Raw Materials to the Facilities.  If the Manufacturer receives a discount or
deduction for any such Transportation 

 

19

 

Costs for the Raw Materials,
Manufacturer shall make such discount or deduction available to Buyer in
accordance with the variance calculations described in Schedule E.

 

4.05   Electronic Data Exchange.  Manufacturer agrees to cooperate with Buyer
in identifying and implementing an electronic interface that will allow for
mutual direct exchange of forecast and inventory data.  If Manufacturer incurs costs (including
incremental personnel) associated with implementing this electronic interface,
it will be at the expense of the Buyer and the Parties will mutually agree on a
payment schedule.

 

4.06         Forward
Visibility.  At the commencement of
every month, Manufacturer shall provide the Suppliers with forward visibility
of the Buyer’s Forecast for six-month intervals which Manufacturer shall
translate into Raw Material requirements as follows: (a) the first
thirteen (13) weeks of the Forecast (showing demand on a weekly basis) and (b) those
three (3) months of the Forecast following the first thirteen weeks
(showing demand on a monthly basis).  At
the commencement of month one and month seven of each year during the Term, in
addition to the forecasting described in the immediately preceding sentence,
Manufacturer will also provide the Suppliers with a twelve (12) month Forecast
(showing demand on a monthly basis).

 

4.07         Conflicts.  To the extent of any conflict or
inconsistency between this Agreement and any purchase order, purchase order
release, confirmation, acceptance, *** or any similar document, the terms of
this Agreement shall govern. In ordering and delivering the Products pursuant
hereto, Manufacturer and Buyer 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 prevail.

 

ARTICLE 5 - ADDITIONAL UNDERSTANDINGS OF THE PARTIES

 

5.01         Other
Affiliates.  If any other Affiliate
of Buyer desires to purchase Products from Manufacturer under the terms of this
Agreement, then, upon the execution of a copy of this Agreement by such
Affiliate, Manufacturer shall accord such Affiliate all of the

 

20

 

benefits hereof and treat such affiliate as a “Buyer” for the purposes
of this Agreement.  To the extent
Manufacturer is having a manufacturing, scheduling or resource allocation
conflict as between Buyer and one of its Affiliates, and such conflict is a
result solely of the demands of these two businesses, and there is no third
party that is also imposing manufacturing, scheduling or resource allocation
demands upon Manufacturer, then Buyer shall resolve such issue between Buyer
and its Affiliate.  If the result of such
conflict is not solely as a result of the demands between Buyer and one of its
Affiliates, Manufacturer shall be obligated to manage such conflict.  The intent of this section is not that
Manufacturer will allocate one portion of time to all of Buyer’s and its
Affiliates’ businesses, and not otherwise impact or impede their allocations to
other non-Affiliated parties.

 

5.02   Exclusive Rights.  The parties agree that Buyer owns all the
Intellectual Property Rights,  and
except as set forth in Section 5.03, Manufacturer and its Affiliates have
no rights to use such Intellectual Property Rights.  Except as otherwise permitted herein, during
the Term of the Agreement, Manufacturer shall supply Buyer on an exclusive
basis with the Products that Buyer will sell in the Territory and neither
Manufacturer nor any of its Affiliates shall sell or distribute, or allow the
sale or distribution by any third party of, the Products (or any Improvement or
product line extension thereto) anywhere. 
Following the termination or expiration of this Agreement, neither
Manufacturer nor any of its Affiliates shall have any rights to manufacture,
sell or distribute, or allow manufacturing, sale or distribution by any third
party of the Products (or any Improvement or line extension thereto) set forth
in Schedule A.

 

5.03         Grant
of Sublicense.

 

(a) Solely to the extent necessary to enable Manufacturer to
manufacture and package the Products for Buyer in accordance with the terms
herein, Buyer hereby grants Manufacturer a royalty-free, non-exclusive
sublicense without the right to grant further sublicenses under any and all
applicable patents and other Intellectual Property Rights owned or 

 

21

 

controlled by or licensed to
Buyer or any of Buyer’s Affiliates to make and package the Products, which grant
cannot be sublicensed.  Nothing herein
shall give Manufacturer any right to use any of Buyer’s or Buyer’s Affiliates
Intellectual Property Rights used in connection with the Products or trademarks
or trade names that may appear on the labeling for the Products, except for
manufacturing Products and completing the packaging labels for the Products as
specified in the Specifications.  Except
as provided above, Manufacturer shall not obtain any right, title or interest
in any of Buyer or Buyer’s Affiliates Intellectual Property Rights or trademark
or any other trademark designation or tradename by virtue of this Agreement or
Manufacturer’s performance of its obligations hereunder.

 

(b)           The
Parties agree that Buyer owns or controls the copyright, trade dress and all
other intellectual property rights used in connection with the packaging
materials for the Products.

 

5.04         Competing
Products.  Manufacturer recognizes
and acknowledges that Buyer and its Affiliates have been, and will continue to
be, actively involved in the fields in which the Products are sold.  Manufacturer acknowledges that Buyer and its
Affiliates market, sell and distribute products which compete directly with the
Products, and may continue to market, sell and distribute these and other competing
products throughout the Term of this Agreement, either inside or outside the
Territory.  Manufacturer acknowledges
that Buyer and its Affiliates may have such products manufactured internally or
by a third party, including, without limitation, a third party that is a
competitor of Manufacturer’s. 
Additionally, Manufacturer acknowledges that throughout the Term, Buyer
and its Affiliates may manufacture Products, or have Products manufactured by a
third party, either inside or outside the Territory, and Buyer and its
Affiliates shall have the right to market, sell and distribute, or have
marketed, sold or distributed such Products outside the Territory.

 

22

 

5.05         Specifications.  The Parties acknowledge and agree that Buyer
will need to make changes to the Specifications throughout the Term of the
Agreement.  Buyer shall make any such
changes that it so requires to the Specifications and such changes shall be
assessed upon receipt by Manufacturer for implementation timing with
confirmation of such receipt by Manufacturer.  
Such change shall be electronically communicated to Manufacturer through
the Buyer’s global specifications system.  
If Manufacturer has any objections to the modified Specifications,
Manufacturer must notify Buyer in writing within fifteen (15) Business Days of
receipt of Specification change.  If
Manufacturer objects, then the Parties shall meet as soon as possible
thereafter to discuss Manufacturer’s objections.  If such change or modification will cause
Manufacturer to incur additional costs and Manufacturer objects to incurring
such cost, then Manufacturer shall so specify that reason in its notification
to Buyer.  Buyer and Manufacturer shall
then mutually agree upon an implementation strategy to the satisfaction of both
Parties.

 

5.06         Cooperation.  Manufacturer shall provide Buyer or any
Regulatory Authority with any data and information in Manufacturer’s possession
relating to the Products or the Facility and its manufacture and quality
control procedures that may be reasonably necessary to enable Buyer to obtain
any governmental approvals mentioned under Section 5.07.

 

5.07         Regulatory
Approval.  As of the Effective Date
and throughout the Term, Manufacturer has and will have all permits,
establishment and facility licenses required by Regulatory Authorities that are
necessary for Manufacturer to manufacture the Products (including storage
thereof), save and except for those permits required by Manufacturer for the
secondary packaging Facility which shall be obtained prior to commencing
secondary packaging activities in said Facility, and provide Products to Buyer
in accordance with the terms herein.  In
the event of any change in the Raw Materials or manufacturing processes solely
with respect to the Products during the Term of the Agreement that has been
requested by Buyer or is required 

 

23

 

by law and which change is not required for, or applicable to, any
other product which Manufacturer manufactures or may manufacture, Manufacturer
will be responsible for securing any Regulatory Approvals that are necessary to
implement such change in its Facility and Buyer will be responsible for securing
any Regulatory Approvals that are necessary to implement such change in the
Products ***.  For the purposes of
clarification and the avoidance of doubt, if any such change is applicable to,
or will impact any other product that Manufacturer manufactures, then
Manufacturer shall make such change and obtain all necessary Regulatory
Approvals, ***.

 

5.09         Back-up
Supply.  Manufacturer recognizes,
acknowledges and agrees that during the Term, Buyer and its Affiliates may
share the Specifications, Intellectual Property Rights, process specifications,
technical information as well as any other data or information, exclusive of
*** and any other financial information pertaining directly to Manufacturer,
that may be useful or necessary in connection with manufacturing, packaging,
producing and storing the Products with another party (which may be a
competitor of Manufacturer) for such other party to qualify its facility so
that such party may manufacture and produce Product that meets the
Specifications if so requested by Buyer. 
Manufacturer further recognizes, acknowledges and agrees that during the
Term Buyer may so request that such party manufacture, package, validate,
produce and store such qualified Product and perform stability testing and any
other tests on such Product that Buyer deems necessary or appropriate to ensure
that such party is able to manufacture validated and qualified Product that
complies with the Specifications.  Buyer
agrees that during the Term it will not purchase any Product from such
manufacturer for sale to a third party in the Territory (e.g., Failure to
Supply), except as otherwise permitted in accordance with the terms herein or
if the Agreement is terminated or expires.

 

5.10         Facilities.  Manufacturer represents and warrants that
throughout the Term of the Agreement all Products will be manufactured,
packaged and stored at the Facilities. 
Manufacturer will not manufacture, package or store the Products or the
Raw Materials at any 

 

24

 

other location throughout the 
Term of the Agreement without prior written authorization from Buyer
which shall not be unreasonably withheld. 
The Parties agree that Buyer shall not be deemed unreasonable in
withholding its consent if it is not able to validate another facility at the
time, whether due to resource constraints or inability to justify additional
costs associated therewith.

 

5.11         Manufacturer
Responsibilities.  Without limiting
any of Manufacturer’s responsibilities herein, and to the extent further
enumerated elsewhere in the Agreement in accordance therewith, the Parties
agree that included within the Price of the Product, Manufacturer shall do the
following: (a) all complaint investigation and reporting; (b) analytical
and microbiological release testing for component, chemical, bulk and Product
as indicated on Specifications (c) pure-buy administration (e.g., supplier
management, audits, other activities and tools necessary to maintain efficient
supplier relations, etc.); (d) storage for all Raw Materials in accordance
with required specifications and temperature guidelines; (e) transportation
for all incoming Raw Materials; (f) input and maintenance of all
Specifications, including test methods, Raw Materials, component, WIP and
Product Specifications; (g) perform root cause/corrective action and track
trends on all Product non-conformances in accordance with Buyer’s requirements;
and (h) provide the lead role in troubleshooting and addressing day-to-day
technical issues in manufacturing, testing and validation with the exception
of  testing of the ***.

 

5.12  ***

 

5.13  ***

 

ARTICLE 6 - IMPROVEMENTS AND CHANGES TO
PRODUCTS

 

6.01         Improvements.
Each year during the Term of this Agreement, Buyer’s intention is to reduce
Price for each upcoming year by *** over the preceding year’s total aggregate
Price for all Products through the Buyer’s cost improvement program (“CIP
Program”).

 

25

 

Manufacturer and Buyer agree to work together, using their joint
commercially reasonable efforts, to strive to reduce the net Price of the
Product(s) by ***  during each
twelve (12) month period during the Term and any Extended Term.  Manufacturer and Buyer will agree upon any
Specification changes resulting from such cost improvements.  At each quarterly meeting (which is to be
held in person), Manufacturer agrees to have developed and to submit to Buyer
at that meeting a written plan for cost improvement opportunities under this
Agreement or any Addendum. ***  In the
event that the cost improvement requires capital investment or other costs
associated with manufacturing or testing of Raw Materials or Product, or other
qualification work, ***.

 

ARTICLE 7 - TERM

 

7.01         Initial
Term.  The initial term of this
Agreement (the “Initial Term”) shall commence on the date hereof and
remain in effect until December 31, 2013, unless sooner terminated as
expressly provided under the term of this Agreement.

 

7.02         Optional
Extension.  Buyer, at its sole
option, may extend this Agreement for up to two additional years after the
expiration of the Initial Term by giving Manufacturer at least eighteen (18)
months prior written notice prior to the expiration of current Agreement.   Price will be calculated based on actual
costs of conversion labor, Raw Materials, overhead and other components of
total cost.  “Term” shall mean the
Initial Term plus any optional extensions exercised by Buyer in accordance with
this Section 7.02.

 

7.03         Additional
Term:  Should Buyer enter into
another Agreement with the Manufacturer upon completion of Term, Manufacturer
and Buyer agree to negotiate the Price of the Products for said additional term
(the “Additional Term”) prior to one hundred and eighty (180) days of the
commencement of said Additional Term. 
Manufacturer agrees to adjust Price 

 

26

 

based on actual costs of conversion labor, Raw Materials, overhead and
other components of total cost.

 

7.04  
***  (a) ***

 

(b)           ***

 

(c)           ***

 

ARTICLE 8 - TERMINATION

 

8.01         Breach.  (a) This Agreement may be terminated,
prior to the expiration of its Term, by either Party by giving written notice
of its intent to terminate and stating the grounds therefore if the other Party
shall materially breach or materially fail in the observance or performance of
any representation, warranty, guarantee, covenant or obligation under this
Agreement, including, without limitation, the Quality Agreement.  The Party receiving the notice shall have
thirty (30) Business Days from the date of receipt thereof to cure, or to
initiate a cure reasonably acceptable to the non-breaching Party, if such
breach or failure is not curable within thirty (30) Business Days of the breach
or failure (the “Additional Cure Period”). 
In the event such breach or failure is cured, the notice shall be of no
effect and the Agreement shall continue on in full force and effect.  In the event (i) such breach or failure
is not cured within such thirty (30) Business Days period or (ii) if a
Party initiates a cure within thirty (30) Business Days for a breach or failure
that cannot reasonably be cured within thirty (30) Business Days, but fails to
effect the cure within the Additional Cure Period then the Agreement shall
terminate at the end of the Additional Cure Period.  If Manufacturer fails to receive an “Acceptable”
rating on any quality audit conducted by Buyer or any of its Affiliates, or by
another party at Buyer’s direction, and fails to provide a corrective action
plan acceptable to Buyer or Affiliate, or fails to

 

27

 

implement such corrective actions in the period agreed upon by Buyer or
Affiliate, such failure is a breach of this Agreement.  If Manufacturer fails to maintain an
acceptable compliance status with the FDA and any other applicable regulatory
agency, such failure shall be a breach of this Agreement.

 

(b) This Agreement may be terminated in accordance with Section 12.01.

 

(c) Notwithstanding Manufacturer’s right to cure a breach in
accordance with Section 8.01(a), in the event that Manufacturer has
***  Buyer so decides to send
Manufacturer a notice of termination for breach.  The Agreement shall terminate upon
Manufacturer’s receipt of such notice. 
Example: ***.

 

8.02         Termination
Without Period of Cure. 
Notwithstanding Section 8.01, Buyer may also terminate this
Agreement without allowing Manufacturer the thirty (30) Business Day period to
cure any such breach or failure in accordance with Section18.02 or 18.03.

 

8.03         Insolvency,
Etc.  This Agreement may be
terminated, prior to the expiration of its Term, upon fifteen (15) calendar
days written notice by either Party: (i) in the event that the other Party
hereto shall (1) apply for or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (2) make a general assignment
for the benefit of its creditors, (3) commence a voluntary case under the
United States Bankruptcy Code, as now or hereafter in effect (the “Bankruptcy
Code”) or similar legislation in Canada, (4) file a petition seeking to
take advantage of any law (the “Bankruptcy Laws”) relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or readjustment of
debts, (5) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in any involuntary case
under the Bankruptcy Code or similar legislation in Canada, or (6) take
any corporate action for the purpose of effecting any of the foregoing; or (ii) 
if a proceeding or case shall be commenced against the other Party hereto in
any court of competent jurisdiction, seeking (1) its liquidation,

 

28

 

reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (2) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Party or of all or any substantial
part of its assets, or (3) similar relief under any Bankruptcy Laws, or an
order, judgment or decree approving any of the foregoing shall be entered and
continue unstayed for a period of 60 days; or an order for relief against the
other Party hereto shall be entered in an involuntary case under the Bankruptcy
Code or similar Canadian legislation.

 

8.04         Change
in Control.  Buyer may, but is not
required to, terminate this Agreement upon written notice to Manufacturer (or
its successor) in the event that an entity other than Manufacturer has gained
control of more than fifty percent (50%) of the ownership of Manufacturer or
control of management; or more than fifty percent (50%) of Manufacturer’s
assets have been transferred by any person or entity or affiliated group; or
Manufacturer has merged or amalgamated with or into another party (even if
Manufacturer is the surviving entity), except in the context of a corporate
reorganization in which the ultimate control of the Manufacturer remains the
same as of the date hereof.  Such termination
will be effective immediately upon Manufacturer’s receipt of written notice
from Buyer informing Manufacturer of Buyer’s termination of the Agreement.  Manufacturer must send Buyer written notice
of any such change in control or ownership or transfer of assets, merger or
amalgamation within five (5) Business Days of such event.  Manufacturer agrees to periodically provide
information to Buyer including, but not limited to, assets, liabilities,
income, expenses, and equity in the event that Manufacturer is acquired or
controlled by a private owner or limited number of owners.  This information will be used by Buyer to
assess Manufacturer’s financial health in order to ensure appropriate
allocation of new Products and on-going reliability of supply for existing
Products.

 

29

 

8.05         Termination
Without Cause. ***

 

8.06         Effect
of Termination.

 

(a)           Damages.  Notwithstanding
the termination of this Agreement for any reason, each Party hereto shall be
entitled to recover any and all Damages which such Party shall have sustained
by reason of the breach by the other Party hereto of any of the terms of this
Agreement.  Termination of this Agreement
for any reason shall not release either Party hereto from any liability which
at such time has already accrued or which thereafter accrues from a breach or
default prior to such expiration or termination, nor affect in any way the
survival of any other right, duty or obligation of either Party hereto which is
expressly stated elsewhere in this Agreement to survive such termination.  In the case of a termination under Section 8.02
above, the Buyer may pursue any remedy available in law or in equity with
respect to such breach, subject to the terms of Section 20.01 (“Arbitration”)
and Section 20.02 (“Mediation”).

 

(b) ***.

 

(c) ***

 

ARTICLE 9 - DELIVERY; INVENTORY.

 

9.01         Delivery.  All charges for packing, inter-plant hauling,
storage and bar coding and Raw Material transportation to the Facilities, are
included in the Price unless otherwise agreed to by the Parties. Buyer shall be
responsible for costs incurred by Manufacturer for custom pallets or packaging
that Buyer agrees, prior to incurring any such costs, is not standard or common
to industry requirement. Buyer may provide a Carrier routing guide for
Manufacturer to use with all shipments of Product and Raw Materials transported
by Buyer’s Directed Materials Carriers. 
Unless otherwise agreed to by both Parties or a Product shipment is
late, short, defective or otherwise incomplete or not in compliance with the terms
herein, Buyer shall pay all delivery charges for Product shipped from the
Facilities to the destination as directed by Buyer.  If a Product shipment is late, short,
defective or otherwise incomplete or not in compliance with the terms herein,
then Buyer may use expedited shipping and Manufacturer shall be responsible for
all shipping costs and expenses incurred by Buyer in connection 

 

30

 

therewith, except if the Product shipment is late, short or otherwise
incomplete because Buyer’s Directed Supplier of Raw Materials was late in
delivery of Raw Materials (and such delay was not caused by or as a result of
Manufacturer) or such Raw Materials were defective.  If the Manufacturer accepts a Purchase Order
from Buyer outside the Firm Zone with prior notice to Buyer that incremental
shipping charges will be incurred, Buyer shall be responsible for any
incremental shipping expenses.  All
shipments must be accompanied by a legible Load Packing List and a VICS standard
bill of lading. Manufacturer agrees to promptly forward the a copy of bill of
lading and other shipping receipt for each shipment in accordance with Buyer’s
written instructions.  Manufacturer
further agrees to promptly render, after delivery of goods or performance of
services, correct and complete invoices to Buyer.

 

9.02         Shipment.
Manufacturer will pack all Product ordered hereunder in a manner suitable for
shipment and sufficient to enable the Product to withstand the effects of
shipping, including handling, during loading and unloading and in compliance
with applicable shipment guidelines and specifications as provided in writing
to Manufacturer by Buyer in order to avoid damage to Product.  Product must be shipped on pallets and in
accordance with Buyer Specifications, and all Product shipped on the pallet
must be of the same universal product code (“UPC”) and lot number.  The risk of loss with respect to Product
shall remain with Manufacturer until such time that Product leaves the Facility
on the designated Carrier, at which time, the risk of loss for the Product
shall transfer to Buyer.  Buyer shall
provide claims responsibility while the Product is in transit from leaving the
Facility to unloading at the Buyer’s facility or such other location as
designated by Buyer as the point of delivery. 
Manufacturer shall be responsible for arranging for the pick-up of
shipments of Product with the designated Carrier.

 

9.03         Inventory.  Manufacturer will maintain inventory of
Products on a first-in, first-out basis. 
Manufacturer and Buyer agree to cooperate to improve the process for
ordering Products.

 

31

 

9.04         Technology and
Standards.  Manufacturer shall
conform to Buyer Specifications regarding labeling of Product shipments.  Throughout the Term, Manufacturer may be
required to provide specific labeling information including “smart labels”,
which would encompass all pertinent data via a barcode or other. Manufacturer
agrees to provide any necessary systems and equipment for compliance with such
requirement and to comply with such requirement, if so requested to do so by
Buyer, at Buyer’s cost.  Manufacturer
will implement and incur the expense for any systems and hardware that is
needed to implement, uphold or remain consistent with industry practices and
standards.

 

ARTICLE 10 - INSPECTION

 

10.01                     Facilities.

 

(a)           Buyer Audit.  Manufacturer grants Buyer the right to audit
or to appoint third parties to audit, at any reasonable time during normal
business hours, the Facilities and the documentation demonstrating Manufacturer’s
satisfactory performance of, and performance with, its manufacturing
obligations under this Agreement.  Buyer
will notify Manufacturer at least twenty (20) Business Days in advance of such
an audit. Buyer may exercise such right not more than once in any calendar year
save and except for situations where a single audit or event reveals
significant concerns from the perspective of Buyer, acting reasonably, that
require appropriate additional audit follow-up.   Any third party appointed by Buyer to
perform such an audit shall at all times be bound by obligations of
confidentiality and non-disclosure of Manufacturer’s confidential information
and agree to disclose to Buyer only such information as is necessary to
determine if Manufacturer is performing its manufacturing obligations in
accordance with this Agreement.   It is
furthermore agreed that the on-site availability of Buyer or such third party
shall have no bearing on Manufacturer’s production schedule as Manufacturer
shall be authorized and entitled to proceed with same in the absence of Buyer’s
representative.  Buyer shall make
reasonable efforts to leverage audits or consolidate auditing activities with
other 

 

32

 

Affiliates in order to minimize auditing activities at
Manufacturer.  Audit results will be
provided to Manufacturer by Buyer to the extent Buyer deems appropriate.

 

(b)           Inspection by
Governmental Authorities. 
Manufacturer shall permit inspections of the Facility by Governmental
Authorities of all relevant territories (such as the FDA, HPFBI or equivalent
foreign regulatory authorities) with respect to the fulfillment of any
requirement for any License or as otherwise necessary to fulfill the
obligations herein during the Term of this Agreement and, if necessary,
thereafter.

 

10.02       Records. Buyer
shall have the right to audit Manufacturer’s records relating to its
performance under this Agreement. 
Manufacturer shall maintain all batch records and other manufacturing
and analytical records, all records of shipments of Product and all validation
data and other applicable records for the greater of (a) as required by
applicable law and regulation or (b) the time periods set forth in the
Quality Agreement.  Manufacturer shall
make such data available to Buyer and Regulatory Authorities upon Buyer’s
reasonable request or if required by law.

 

ARTICLE 11 - QUALITY/LABEL
VERIFICATION/DEFECTIVE PRODUCT/INSPECTIONS/TESTING

 

11.01       Quality.   Mutual
quality roles and responsibilities are defined in the Quality Agreement and
each Party shall fulfill such responsibilities.

 

11.02       Electronic Label
Verification.  Manufacturer shall
electronically scan every Product to ensure that the label and any labeled Raw
Material (i.e.:  printed tube, carton,
patient information circular and any other pre-printed Raw Material) utilized
in the manufacture of the Product meet Specifications for such Product before
allowing Product to be shipped from the Facility.  If the label or labeled Raw Materials are not
accurate, Manufacturer will not allow such Product to be shipped to Buyer.  Buyer and Manufacturer agree that the
requirements for 

 

33

 

electronic label verification may change over the Term of the
Agreement.  Buyer will notify
Manufacturer of any such changes in writing, and the Parties shall negotiate an
effective date for such changes in good faith. 
In the event there are costs involved for any change requested by Buyer,
this will be the sole responsibility of the Buyer.

 

11.03       Disposition of
Defective Product.  Without prejudice
to any other remedy that Buyer may have, Manufacturer shall replace at its own
cost and expense, including reimbursement of freight and disposition costs
incurred by Buyer, Product that fails to comply with the Specifications or has
any such defects, except if such defects or failure to comply with
Specifications is due to improper storage or handling by a Designated or Other
Carrier, Buyer, Buyers Affiliates, or any customers of the Buyer. Buyer shall
notify Manufacturer of the existence and nature of any non-compliance or defect
and Manufacturer shall have a reasonable opportunity, not to exceed ten (10) Business
Days from receipt of notification, to inspect such defective Product which ten (10) Business
Days shall commence as of the date the Manufacturer receives such allegedly
defective Product.  Buyer shall
have no obligation to pay for any Product that is subject to such a claim of
non-compliance or defect and Manufacturer shall reimburse Buyer for all direct,
out-of-pocket costs incurred by Buyer in connection with such Product,
including, without limitation, shipping of the Product and disposition costs,
except if such defects or failure to comply with Specifications is due to
improper storage or handling by a Designated Carrier, Buyer or any customers of
the Buyer.  Buyer will control the
disposition process.  If Manufacturer
fails to so inspect such defective Product, Buyer may dispose of such defective
Product as it sees fit and Manufacturer shall promptly (1) reimburse Buyer
for all direct, out-of-pocket costs incurred by Buyer in connection with such
Product, including without limitation, shipping of the Product and disposition
and (2) replace such defective Product at its own cost and expense.

 

34

 

11.04                     Independent Testing. If,
after Manufacturer’s inspection of such Product, the Parties disagree as to the
Product’s conformance to the Specifications or whether the Product has such a
defect, either Party may deliver the Product to an independent third-party
laboratory, mutually and reasonably acceptable to both Parties, for analytical
testing to confirm the Product’s conformance to the Specifications or the
presence or absence of defects. All costs associated with such third-party
testing shall be at Buyer’s expense unless the tested Product is deemed by such
third-party to be defective or not in compliance with the Specifications, in
which case all such costs, including reimbursement of freight and disposition
costs, shall be promptly paid by Manufacturer. For greater clarity, if the
Product is not found to be defective or is found in compliance with the
Specifications, Buyer shall reimburse Manufacturer for all freight and
transportation costs and all late fees, if the Product Price has not been paid
in accordance with the terms of Section 3.10 herein. No payment for
Product by Buyer or any third-party agent of Buyer shall constitute acceptance
by Buyer thereof, nor shall any inspection or testing be in lieu or
substitution of any obligation of Manufacturer for testing, inspection and
quality control as provided in the Specifications or under applicable local,
state, provincial or federal laws, rules, regulations, standards, codes or
statutes.

 

11.05                     Disposition of Defective Raw
Materials. Manufacturer shall inspect all Raw Materials upon arrival at the
Facility. Manufacturer shall be responsible for ensuring that defective Raw
Materials are identified upon receipt and Buyer shall be responsible for
resolving any issues (quality or otherwise) that arise in connection with the
Raw Materials directly with the Suppliers. Manufacturer shall not invoice Buyer
for, nor shall Buyer be liable to Manufacturer for, any defective Raw
Materials.

 

11.06                     Reports. Upon Buyer’s
written request, Manufacturer shall from time to time promptly provide Buyer
written reports relating to any aspects of the Product that are identified in
the Specifications. Notwithstanding the immediately preceding sentence, 

 

35

 

Manufacturer shall provide
Buyer (without a written request) with those reports identified in the Quality
Agreement which Manufacturer is obligated thereunder to provide to Buyer.

 

11.07                     Corrective Action. In the
event any governmental agency having jurisdiction shall request or order, or if
Buyer shall determine to undertake, any corrective action with respect to any
Product (or any finished product containing or contained in any Product),
including any recall, corrective action or market action, and the cause or basis
of such recall or action is attributable solely to a breach by Manufacturer of
any of its warranties, guarantees, representations, obligations or covenants
contained herein, then Manufacturer shall be liable, and shall reimburse Buyer
for the reasonable costs of such action including the cost of any Product (or
any finished product containing or contained in any Product) which is affected
thereby.

 

11.08                     Product Complaints. In the
event Manufacturer receives any Product complaints, Manufacturer shall immediately
notify Buyer of such complaint and in no event more than two (2) Business
Days after receipt of such complaint.

 

11.09                     Regulatory Inspections. In
the event the Facility is the subject of an inspection by any Regulatory
Authority or any other duly authorized agency of any national, state,
provincial or local government directly relating to the manufacturing,
packaging or warehousing of the Product, WIP Product or the Raw Materials,
Manufacturer shall notify Buyer within two (2) Business Days of learning
of such inspection Manufacturer agrees to promptly notify Buyer of any
inspection by any Regulatory Authority pending as of the date hereof or as
notice of same may arise and shall keep Buyer informed of the resolution of the
matter with the relevant Governmental Authority. Manufacturer shall supply
Buyer with copies of any correspondence or portions of correspondence to the
extent relating to the Products, WIP Products or the Raw Materials, including
any communications to or from any Regulatory Authority (including the reporting
of adverse drug experiences or field alerts) which might adversely affect
Manufacturer’s ability to perform its obligations under this Agreement.

 

36

 

Manufacturer shall be authorized
to redact all information not pertaining to the Products. In the event
Manufacturer receives any regulatory letter or written comments from any
Regulatory Authority in connection with manufacturing and packaging of the
Products hereunder, it shall provide Buyer with a copy of each such
communication. To the extent Manufacturer is required to submit any
correspondence to a Regulatory Authority that relates to the manufacture,
packaging or warehousing of the Product, WIP Products or the Raw Materials,
Manufacturer shall provide Buyer with a copy of such correspondence as far in
advance of its submission to such Regulatory Authority as possible and Buyer
shall have the opportunity to review and comment upon such correspondence, but
in no event shall Buyer review hinder submission of correspondence to such
Regulatory Authority in the allotted time period.

 

11.10                     Testing.
Manufacturer shall perform all marketed Product stability testing and other
testing and release activities in accordance with the Specifications, cGMPs,
the Quality Agreement and the other terms of this Agreement. Manufacturer shall
provide Buyer with a copy of all test results.

 

11.11                     Safety. Manufacturer
shall enforce safety procedures for its manufacturing, packaging and storing of
the Products, WIP Products and Raw Materials and handling and disposal of waste
relating thereto that comply with all federal, state, provincial and local
environmental and occupational safety and health requirements. Manufacturer
will pass all safety audits performed by, or at the request of, Buyer with an “Acceptable”
rating. Failure to do so, or to remedy any failures identified in the safety
audit within a mutually agreed upon timeframe to the Buyer’s satisfaction shall
be a breach of this Agreement. Such responsibilities shall include the proper
disposal of waste in an appropriate manner consistent with the nature of the
waste and at a permitted disposal facility.

 

11.12                     Storage.
To the extent any Product, WIP Product or Raw Material is stored, Manufacturer
shall store such Product, WIP Product and Raw Material in a controlled 

 

37

 

environment that meets the Specifications, cGMPs and all other
applicable laws, rules and regulations in the Territory, and has been pre-approved
by the Buyer. Manufacturer will implement and enforce security precautions to
prevent unauthorized access to the Products, WIP Products and Raw Materials
while in the control of Manufacturer.

 

(a)                                  Shipping Responsibilities. The Products ordered by Buyer pursuant to this
Agreement shall be deemed delivered by Manufacturer to Buyer once delivered on
the Facilities’ loading docks EX WORKS (Incoterms 2000). Shipment of the
Products shall be at Buyer’s sole cost and expenses. Buyer shall be liable for
any and all transportation charges, including without limitation freight,
duties and taxes levied in connection with the supply of Products and shipment
of same. Manufacturer shall arrange for the shipment of the Products in
accordance with Buyer’s instructions. Buyer shall select and retain the Carrier
and insurance company for shipping of the Products in accordance with the terms
of this Agreement. Buyer shall provide Manufacturer with its Carrier’s name and
account number and its insurance company contact information. Manufacturer will
schedule freight pick up with Buyer’s selected Carrier and complete the
documentation on behalf of Buyer for each shipment of Product by using Buyer’s
account number. All costs and invoices shall be charged by Buyer’s selected
Carrier directly to Buyer for all third party costs related to same.

 

(b)                                 Transfer of Title. Notwithstanding anything to the contrary, title to and risk for the
Products supplied to Buyer under this Agreement passes to Buyer EX WORKS
(Incoterms 2000) Manufacturer’s Facilities loading docks, at the time the
Products are placed on the Facilities’ loading docks at Buyer’s disposal, not
cleared for export and not loaded on any collecting vehicle. Manufacturer shall
not be liable to Buyer for the costs of loss of any kind arising out of or in
relation to damage to or loss of the Products, however caused, which occurs
after title to and risk for the Products passes to Buyer, nor shall any
liability of Buyer to Manufacturer under this Agreement be diminished or
extinguished by reason of such loss or 

 

38

 

damage. For greater certainty, Buyer shall be liable for all costs and
risks of loss while Products are in transit.

 

11.13                     Shortages. Manufacturer
shall notify Buyer in writing of any shortage in any shipment of Product (when
compared to the amount claimed in the invoice for such shipment) within ***
after delivery of such shipment. Buyer shall notify Manufacturer in writing of
any shortage in any shipment of Product (when compared to the amount claimed in
the invoice for such shipment) within *** of receipt of shipment by Buyer. Manufacturer
shall refund to Buyer the Price paid for the quantity of the shortfall.

 

ARTICLE 12 - FAILURE TO SUPPLY; FORCE MAJEURE

 

12.01                     Force Majeure Events. If
either Party is prevented from performing any of its obligations hereunder due
to any cause which is beyond the non-performing Party’s reasonable control,
including fire, explosion, flood, or other acts of God; acts, regulations, or
laws of any government; war or civil commotion; strike, lock-out or labor
disturbances; or failure of public utilities or common Carriers, riots, arrests
of people, terrorist actions, rebellion or sabotage, failure of fuel or water
supply or ice, lightning, epidemic, hydro electric power failures, or any delay
or failure by a Governmental Authority to issue any relevant permit or order
not caused by the act or omission of the Party (a “Force Majeure Event”),
such non-performing Party shall not be liable for breach of this Agreement with
respect to such non-performance to the extent any such non-performance is due
to a Force Majeure Event. The non-performing Party is required to provide
immediate written notice to the other Party of the Force Majeure Event. Such
non-performance will be excused for three months under these conditions or as
long as such event shall be continuing (whichever occurs sooner), provided that
the non-performing Party gives immediate written notice to the other Party of
the Force Majeure Event.

 

39

 

Furthermore, such
non-performing Party shall exercise all commercially reasonable efforts to
eliminate the Force Majeure Event and to resume performance of its affected
obligations as soon as practicable. If Manufacturer has a Force Majeure
Event that remains unresolved after ninety (90) days, then Buyer may choose,
but shall not be obligated, to terminate the Agreement with such termination to
be effective thirty (30) days following Manufacturer’s receipt of written
notice from Buyer of such termination, without payment of any penalty, except
for any payment owed and outstanding to Manufacturer at said date or for any
Raw Materials or other Materials ordered at request of Buyer during said period
and reimbursement for any outstanding payment of the ***.

 

12.02                     Failure to Supply.

 

In the event that any of the following occur: (a) Manufacturer
notifies Buyer in accordance with Section 4.03 that Manufacturer will not
be able to fulfill Buyer’s Purchase Order as requested by Buyer and which
Purchase Order was requested in accordance with the terms herein (e.g., Buyer’s
requested dates for delivery of Purchase Orders must comply with the
requirements in Article 4 (except for those Purchase Orders that could not
be completed as a result of Direct Supplier’s failure to supply as described in
Section 4.03(a) ; (b) Manufacturer fails to fulfill the Purchase
Order in accordance with the terms herein; (c) Buyer has sent Manufacturer
a notice of termination in accordance with Section 8.01 or 8.02
(regardless of whether or not Manufacturer is attempting to correct such breach
that triggered Buyer’s notice within Manufacturer’s thirty (30) day cure
period); or (d) Manufacturer is otherwise unable or unwilling to supply
Product that complies with the requirements herein in such quantities as Buyer
shall request and in compliance with the delivery periods set forth in the
applicable Purchase Order (whether due to the occurrence of a Force Majeure
Event or otherwise) (each of (a) through (d) are referred to as a “Failure
to Supply”), then (i) immediately following such Failure to Supply
Buyer may, in addition to any other rights and remedies hereunder, purchase
Product from another manufacturer

 

40

 

or manufacture such Product for itself; 
(ii) Manufacturer shall provide Buyer and such other manufacturer
with assistance, as reasonably requested, in connection with such manufacturer’s
or Buyer’s efforts to supply such Product to Buyer; (iii) Buyer shall have
no obligation to purchase such ordered Product from Manufacturer for sale or
distribution in the Territory or otherwise until any contractual obligations
that Buyer has assumed in connection with producing the same or obtaining such
substitute source of supply shall have terminated or if Buyer opts to
manufacture internally, until Buyer can reasonably resume purchasing Product
from Manufacturer without any additional cost to Buyer; (iv) Buyer shall
have no obligation to affirmatively terminate any such contractual arrangements
or, if Buyer opted to manufacture Product internally, cease manufacturing
internally prior to such time that Buyer could revert to Manufacturer without
incurring any cost; and (v) Manufacturer shall make available to Buyer or
its designee access to all technical and proprietary materials, information and
techniques necessary or helpful for Buyer to procure required Raw Materials or
Product or arrange an alternative supplier of Raw Materials or Product. Notwithstanding
anything to the contrary contained in this Agreement, in the event that Buyer
shall make or have made Product, pursuant to this Section 12.02, Buyer
shall be permitted to disclose to any third party any Confidential Information
as is reasonably necessary in connection with such activities (subject to such
third party agreeing in writing to be bound by the terms of Article 15
hereof), save and except for the direct labour (variable costs), fixed overhead
costs and profit margins of the Manufacturer.

 

ARTICLE 13 - INSURANCE

 

Manufacturer agrees to procure and maintain
in full force and effect during the Term of this Agreement valid and
collectible insurance policies in connection with its activities as
contemplated hereby which policies shall be in compliance with Schedule D
attached hereto and incorporated herein. Upon Buyer’s request, Manufacturer
shall provide to Buyer a certificate 

 

41

 

of coverage or other written
evidence reasonably satisfactory to Buyer of such insurance coverage.

 

ARTICLE 14 - LABELING; ARTWORK; PROPRIETARY RIGHTS

 

14.01                     Packaging. Buyer shall have
the right to determine the appearance and text of any labeling and packaging
used in connection with any Product or any finished product containing or
contained in any Product. If there is to be change to any artwork for any
Product, at least sixteen (16) weeks prior to the intended first delivery date
of such Product with such changed artwork, Buyer shall provide to the Manufacturer,
at no cost, digital artwork in a format acceptable to the Manufacturer and in
compliance with the packaging specifications for such Product. ***.

 

14.02                     Intellectual Property. Manufacturer
acknowledges that Buyer is the exclusive owner of and has all rights to the
trademarks, tradedress, copyrights, slogans, artwork and all other intellectual
property that appear on or are otherwise used in connection with the sale and
use of the Products. Any inventions, improvements or ideas relating to the subject
matter of this Agreement, which are conceived and/or reduced to practice by the
Manufacturer in connection with or during its performance under this Agreement
shall be the property of the Buyer. Manufacturer will, without expense to Buyer
other than reasonable payment for time involved and any actual expenses
incurred, execute, acknowledge and deliver to Buyer all documents required by
Buyer to protect such inventions, improvements or ideas by patent or otherwise
in any and all countries of the world and to vest title to said patents,
inventions, improvements or ideas in Buyer, and further render such assistance
to Buyer as may be required in any patent office proceeding or litigation
involving said inventions, improvements or ideas.

 

42

 

ARTICLE 15 - CONFIDENTIALITY

 

Neither Party shall use or disclose to third
parties any Confidential Information of the other (except to comply with its
obligations under this Agreement) and each Party shall ensure that its and its
Affiliates’ employees, officers, representatives and agents shall not use or
disclose to third parties any Confidential Information and upon the termination
of this Agreement shall return to the other or destroy all Confidential
Information in written or electronic form, save and except for one copy to be
kept for archival purposes by the legal department of each Party to determine
compliance with the obligations herein. Confidential Information shall not
include information that (i) was already known to receiving Party at the
time of its receipt thereof or is independently developed by receiving Party,
as evidenced by its written records, (ii) is disclosed to receiving Party
after its receipt thereof by a third party who, receiving Party in good faith
believes, has a right to make such disclosure without violating any obligation
of confidentiality or (iii) is or becomes part of the public domain
through no fault of receiving Party.

 

ARTICLE 16 - PUBLIC ANNOUNCEMENTS

 

16.01                     Publicity. (a) The
Parties hereto covenant and agree that, except as provided for herein below,
each will not from and after the date hereof make, issue or release any public
announcement, press release, statement or acknowledgment of the existence of,
or reveal publicly the terms, conditions and status of, the transactions
contemplated herein, without the prior written consent of the other Party as to
the content and time of release of and the media in which such statement or
announcement is to be made; provided, however, that in the case of
announcements, statements, acknowledgments or revelations which either Party is
required by applicable law, regulation, court order or order of a regulatory
authority to make, issue or release, the making, issuing or releasing of any
such announcement, statement, acknowledgment or revelation by the Party so
required to do so by law shall not constitute a breach of this Agreement if
such Party shall have given, to the extent reasonably possible, not less than
two (2) calendar

 

43

 

days prior notice to the other
Party, and shall have attempted, to the extent reasonably possible, to clear
such announcement, statement, acknowledgment or revelation with the other Party.
The discloser shall however not be prevented from complying with said court
order, order of a regulatory authority, regulatory or applicable law if the
Party whose Information is being disclosed does not seek an appropriate order
within the prescribed delay for the discloser to comply with the court or
regulatory order, or applicable requiring disclosure. Manufacturer shall not
use the name of Buyer or any of its Affiliates for advertising or promotional
purposes without the prior written consent of Buyer. In furtherance of the
foregoing, Manufacturer shall not originate any publicity or other
announcement, written or oral, whether to the public, the press, the trade,
Buyer’s or Manufacturer’s customers or otherwise, relating to this Agreement or
the existence of an arrangement between the parties, without the prior written
approval of Buyer, except if such announcement is required by law, regulation,
court order or order of a regulatory authority.

 

(b) The Parties acknowledge that
Manufacturer may be required to file this Agreement as an exhibit to its Form 20-F
filing and its Canadian Annual Information Form filings in 2008 or
thereafter as a material contract. If Manufacturer’s US counsel (or Canadian
counsel for the Canadian filings) determines that in its legal opinion in
writing such a filing must be made, Manufacturer will seek confidential
treatment for this Agreement and shall use all reasonable efforts to protect
the confidentiality of this Agreement. Provided Manufacturer is successful in its
efforts to obtain confidential treatment for this Agreement, Manufacturer shall
provide Buyer with a sufficient opportunity to review the redacted version of
the Agreement before submission; and to the extent Manufacturer is able to do
so by law, Manufacturer will incorporate Buyer’s comments.

 

44

 

ARTICLE
17 - REPRESENTATIONS AND WARRANTIES

 

17.01       Warranties. 
Manufacturer represents and warrants to Buyer that all Product supplied
in connection with this Agreement shall be free from defects in material and
workmanship and shall be manufactured and provided in accordance and conformity
with the Specifications and in compliance with this Agreement and all
applicable legal requirements, including, without limitation, cGMPs.  Manufacturer represents and warrants that it
shall comply with all present and future statutes, laws, ordinances and
regulations relating to the manufacture, packaging, storage and supply of the
Products being provided hereunder, including, without limitation, those
enforced by the United States Food and Drug Administration (including
compliance with good manufacturing practices) and other applicable Regulatory
Authority.  Manufacturer represents and
warrants that it will hold all licenses, permits and similar governmental
authorizations necessary or required for Manufacturer to conduct its operations
and business and manufacture the Products throughout the Term.  Manufacturer represents and warrants that any
Products that have been stored until delivery or WIP Products and/or Raw
Materials stored until use, shall have been stored under appropriate and secure
conditions and in accordance with cGMPs and any other requirements in such
Territory.  Manufacturer represents and
warrants that Product supplied in connection with this Agreement will not contain
any WIP Product and Raw Materials that have not been tested, used or stored in
accordance with the Specifications, quality assurance standards instructed by
Buyer and all applicable governmental standards.  Manufacturer represents and warrants that it
will maintain all equipment used in connection with the manufacturing,
packaging and supplying of Product hereunder in good working condition and in
accordance with all applicable laws, rules and regulations.

 

17.02       Execution and Performance of Agreement.  Manufacturer and Buyer each represents to the
other that it has full right, power and authority to enter into and perform its
obligations under this Agreement. 
Manufacturer and Buyer each further represents and warrants 

 

45

 

to the other that the performance of its
obligations under this Agreement will not result in a violation or breach of,
and will not conflict with or constitute a default under any agreement,
contract, commitment or obligation to which such Party or any of its Affiliates
is a Party or by which it is bound.

 

17.03       Buyer Representations and
Warranties.

 

(a)           Representations
and Warranties.  Buyer represents and
warrants to Manufacturer that:

 

(i)            it shall obtain and maintain all
necessary permits, registrations and licenses required for it to perform its
obligations under this Agreement;

 

(ii)           to the best of Buyer’s knowledge the
manufacturing of the Products by Manufacturer to Buyer pursuant to this
Agreement will not constitute an infringement, misappropriation or violation of
any Intellectual Property of a third party;

 

(iii)          it shall provide the Specifications
necessary to manufacture the Products in accordance with the terms herein to
Manufacturer and shall provide such other information Buyer deems necessary
(e.g., validation protocol) for Manufacturer to manufacture the Products in
accordance with the terms herein and, upon reasonable notice from Manufacturer,
Buyer shall make certain of its employees available to Manufacturer to respond
to questions about such information; and

 

(iv) Buyer
shall carry and keep in good force during the term of this Agreement insurance
coverage in such form and amount as a reasonable party in similar circumstances
would carry and keep in order to fulfill its obligations hereunder. Buyer shall
submit a certificate of such insurance (which shall include such information)
to Manufacturer for its approval within thirty (30) days of the date of
signature of this Agreement.  If such
certificate is not furnished within thirty (30) days, Manufacturer shall notify
Buyer in writing and give Buyer thirty (30) days to 

 

46

 

cure
such breach.  If Buyer fails to provide
the certificate during such thirty (30) day cure period, Manufacturer may, at
its option, immediately terminate this Agreement or any amendment thereof.

 

ARTICLE
18 -COMPLIANCE

 

18.01       Compliance with Certain Laws.  Manufacturer agrees to comply at all times
with all laws, executive orders, rules and regulations of all governments
and legislative authorities having jurisdiction over its business and
activities. Specifically, Manufacturer agrees to comply with the applicable
provisions of any federal or provincial law and all executive orders, rules and
regulations issued thereunder, whether now or hereafter in force, prohibiting
discrimination against any employee or applicant for employment because of
race, color, religion, sex or national origin; prohibiting discrimination
against any employee or applicant for employment because of physical or mental
handicap; and any fair labor acts, laws or rules.

 

18.02       Compliance with Policy on the Employment of Young Persons.
Manufacturer and its officers have read and understand the Johnson &
Johnson Policy on the Employment of Young Persons (the “Policy”).  In the manufacture and supply of all Products
hereunder, Manufacturer shall employ young persons only as permitted by the
Policy.  Manufacturer shall permit
representatives of Buyer to enter Manufacturer’s premises at any reasonable
time, and Manufacturer shall ensure that representatives of Buyer shall be
permitted to enter the premises of any subcontractor involved in the
manufacture or supply of any Products (or component thereof) at any reasonable
time, in order to inspect relevant employment, health and safety records and to
observe the manufacturing process. 
Manufacturer (and its subcontractors) shall maintain the records
necessary to demonstrate compliance with the Policy and shall provide to Buyer
a written certification of such compliance annually during the Term of this
Agreement.  If Manufacturer shall fail to
comply with this Section, then Buyer shall have the right to terminate this
Agreement forthwith, effective upon 10 days’ prior written notice, and 

 

47

 

without
payment of any penalty or termination fee, save and except any amount owed and
outstanding ***.

 

18.03       Compliance with Environmental, Safety, and Industrial
Hygiene.  With respect to all
environmental, safety and industrial hygiene matters related to Manufacturer’s
activities under this Agreement, Manufacturer shall (a) certify material
compliance with all applicable laws and regulations issued by federal,
provincial and local authorities, (b) inform Buyer promptly of any
significant adverse event (e.g., fires, explosions, accidental discharges), (c) inform
Buyer promptly of any allegations or findings of material violations of
applicable laws or regulations, (d) allow Buyer to inspect the Facilities
if notified of adverse event, such inspections to be at reasonable times and
upon reasonable written notice.  If
Manufacturer shall fail to comply with any of the conditions in this Section,
then Buyer shall have the right to terminate this Agreement forthwith,
effective upon ten (10) Business Days’ prior written notice, and without
payment of any penalty or termination fee, save and except any amount owed and
outstanding ***.

 

ARTICLE
19 -INDEMNIFICATION

 

19.01       Indemnification by Manufacturer.  Manufacturer shall indemnify and hold
harmless Buyer (and its Affiliates) from and against any and all direct
damages, liabilities, claims, costs, charges, judgments and expenses (including
reasonable attorneys’ fees) (collectively “Damages”) that may be sustained,
suffered or incurred by Buyer (or its Affiliates), arising directly from or by
reason of (a) the breach by Manufacturer of any warranty, representation,
covenant or agreement made by Manufacturer in this Agreement; or (b) actual
or alleged injury to person or property or death occurring to any of
Manufacturer’s employees, subcontractors, invitees, agents or individuals on
Manufacturer’s premises; (c) any Product that does not conform to the
Specifications and other requirements set forth herein; 

 

48

 

(d) Manufacturer’s manufacture, packaging or
supply of Products under this Agreement if not in accordance with the
Specifications; or (e) Manufacturer’s negligence or willful misconduct.

 

19.02       Indemnification by Buyer.  Buyer shall indemnify and hold harmless
Manufacturer (and its Affiliates) from and against any and all Damages, that
may be sustained, suffered or incurred by Manufacturer (or its Affiliates)
arising directly from or by reason of (a) the breach by Buyer of any
warranty, representation, covenant or agreement made by Buyer in this
Agreement, (b) Buyer’s negligence or willful misconduct, (c) any
actual or alleged injury to person or property or death occurring to any of
Buyer’s employees, invitees, agents or individuals while on Manufacturer’s
premises due to the negligence of said employees, invitees, agents or
individuals or (d) a claim that the sale of the Product infringes,
misappropriates or violates another party’s patented intellectual property.

 

19.03       Claims.  Each
indemnified Party agrees to give the indemnifying Party prompt written notice
of any matter upon which such indemnified Party intends to base a claim for
indemnification (an “Indemnity Claim”) under this Article 19.  The indemnifying Party shall have the right
to participate jointly with the indemnified Party in the indemnified Party’s
defense, settlement or other disposition of any Indemnity Claim.  With respect to any Indemnity Claim relating
solely to the payment of money damages and which could not result in the indemnified
Party’s becoming subject to injunctive or other equitable relief or otherwise
adversely affect the business of the indemnified Party in any manner, and as to
which the indemnifying Party shall  have
acknowledged in writing the obligation to indemnify the indemnified Party
hereunder, the indemnifying Party shall have the sole right to defend, settle
or otherwise dispose of such Indemnity Claim, on such terms as the indemnifying
Party, in its sole discretion, shall deem appropriate; provided that the indemnifying
Party shall provide reasonable evidence of its ability to pay any damages
claimed and with respect to any such settlement shall obtain the written
release of the indemnified Party from the Indemnity Claim.  The indemnifying Party shall obtain

 

49

 

the written consent of the indemnified Party
prior to ceasing to defend, settling or otherwise disposing of any Indemnity
Claim if as a result thereof the indemnified Party would become subject to
injunctive or other equitable relief or the business of the indemnified Party
would be adversely affected in any manner.

 

19.04       NEITHER PARTY SHALL BE ENTITLED TO SEEK
PUNITIVE, INDIRECT, EXEMPLARY, CONSEQUENTIAL OR SPECIAL DAMAGES INCLUDING LOSS
OF PROFITS FROM THE OTHER.

 

ARTICLE
20 -MISCELLANEOUS

 

20.01       Arbitration.           (a) Any dispute, claim
or controversy arising from or related in any way to this Agreement or the
interpretation, application, breach, termination or validity thereof, including
any claim of inducement of this Agreement by fraud or otherwise, will be
submitted for resolution to arbitration pursuant to the rules then
pertaining of the CPR Institute for Dispute Resolution for Non-Administered
Arbitration (available at www.cpradr.org/arb-rules.htm), or successor (“CPR”),
except where those rules conflict with these provisions, in which case
these provisions control.  The
arbitration will be held in New Jersey.

 

(b) The panel shall
consist of three arbitrators chosen from the CPR Panels of Distinguished Neutrals
(or, by agreement, from another provider of arbitrators) each of whom is a
lawyer with at least 15 years experience with a law firm or corporate law
department of over 25 lawyers or who was a judge of a court of general
jurisdiction.  In the event the aggregate
damages sought by the claimant are stated to be less than ***, and the
aggregate damages sought by the counterclaimant are stated to be less than ***,
and neither side seeks equitable relief, then a single arbitrator shall be
chosen, having the same qualifications and experience specified above.  Each arbitrator shall be neutral,
independent, disinterested, impartial and shall abide by The 

 

50

 

CPR-Georgetown Commission Proposed Model Rule for
the Lawyer as Neutral available at www.cpradr.org/cpr-george.html.

 

(c) The Parties agree
to cooperate (1) to attempt to select the arbitrator(s) by agreement
within 45 days of initiation of the arbitration, including jointly interviewing
the final candidates, (2) to meet with the arbitrator(s) within 45
days of selection and (3) to agree at that meeting or before upon
procedures for discovery and as to the conduct of the hearing which will result
in the hearing being concluded within no more than nine (9) months after
selection of the arbitrator(s) and in the award being rendered within 60
days of the conclusion of the hearings, or of any post-hearing briefing, which
briefing will be completed by both sides within 45 days after the conclusion of
the hearings.

 

(d) In the event the
Parties cannot agree upon selection of the arbitrator(s), the CPR will select
arbitrator(s) as follows: CPR shall provide the Parties with a list of no
less than 25 proposed arbitrators (15 if a single arbitrator is to be selected)
having the credentials referenced above. 
Within 25 days of receiving such list, the Parties shall rank at least
65% of the proposed arbitrators on the initial CPR list, after exercising cause
challenges.  The Parties may then
interview the five candidates (three if a single arbitrator is to be selected)
with the highest combined rankings for no more than one hour each and,
following the interviews, may exercise one peremptory challenge each.  The panel will consist of the remaining three
candidates (or one, if one arbitrator is to be selected) with the highest
combined rankings.  In the event these
procedures fail to result in selection of the required number of arbitrators,
CPR shall select the appropriate number of arbitrators from among the members
of the various CPR Panels of Distinguished Neutrals, allowing each side
challenges for cause and three (3) peremptory challenges each.

 

(e) In the event the Parties cannot agree upon procedures for
discovery and conduct of the hearing meeting the schedule set forth in
paragraph c above, then the arbitrator(s) shall set dates

 

51

 

for the hearing, any post-hearing briefing, and the issuance of the
award in accord with the paragraph c schedule.  The arbitrator(s) shall provide for
discovery according to those time limits, giving recognition to the
understanding of the Parties that they contemplate reasonable discovery,
including document demands and depositions, but that such discovery be limited
so that the paragraph c schedule may be met without difficulty. In no
event will the arbitrator(s), absent agreement of the Parties, allow more than
a total of ten days for the hearing or permit either side to obtain more than a
total of 40 hours of deposition testimony from all witnesses, including both
fact and expert witnesses, or serve more than 20 individual requests for
documents, including subparts, or 20 individual requests for admission or
interrogatories, including subparts.  Multiple
hearing days will be scheduled consecutively to the greatest extent possible.

 

(f) The arbitrator(s) must
render their award by application of the substantive law of New Jersey and are
not free to apply “amiable compositeur” or “natural justice and equity.”  The arbitrator(s) shall render a written
opinion setting forth findings of fact and conclusions of law with the reasons
therefor stated.  A transcript of the
evidence adduced at the hearing shall be made and shall, upon request, be made
available to either Party.  The
arbitrator(s) shall have power to exclude evidence on grounds of hearsay,
prejudice beyond its probative value, redundancy, or irrelevance and no award
shall be overturned by reason of such ruling on evidence.  To the extent possible, the arbitration
hearings and award will be maintained in confidence.

 

(g) In the event the
panel’s award exceeds *** in monetary damages or includes or consists of
equitable relief, or rejects a claim in excess of that amount or for that
relief, then the losing Party may obtain review of the arbitrators’ award or
decision by a single appellate arbitrator (the “Appeal Arbitrator”) selected
from the CPR Panels of Distinguished Neutrals by agreement or, failing
agreement within seven working days, pursuant to the selection procedures

 

52

 

specified in paragraph d above. If CPR
cannot provide such services, the Parties will together select another provider
of arbitration services that can.  No
Appeal Arbitrator shall be selected unless he or she can commit to rendering a
decision within forty-five days following oral argument as provided in this
paragraph.  Any such review must be
initiated within thirty (30) days following the rendering of the award
referenced in paragraph (f) above.

 

(h) The Appeal Arbitrator
will make the same review of the arbitration panel’s ruling and its bases that
the U.S. Court of Appeals of the Circuit where the arbitration hearings are
held would make of findings of fact and conclusions of law rendered by a
district court after a bench trial and then modify, vacate or affirm the
arbitration panel’s award or decision accordingly, or remand to the panel for
further proceedings.  The Appeal
Arbitrator will consider only the arbitration panel’s findings of fact and
conclusions of law, pertinent portions of the hearing transcript and
evidentiary record as submitted by the Parties, opening and reply briefs of the
Party pursuing the review, and the answering brief of the opposing Party, plus
a total of no more than four (4) hours of oral argument evenly divided
between the Parties.  The Party seeking
review must submit its opening brief and any reply brief within seventy-five
(75) and one hundred thirty (130) days, respectively, following the date of the
award under review, whereas the opposing Party must submit its responsive brief
within one hundred ten (110) days of that date. 
Oral argument shall take place within five (5) months after the
date of the award under review, and the Appeal Arbitrator shall render a
decision within forty-five (45) days following oral argument.  That decision will be final and not subject
to further review, except pursuant to the Federal Arbitration Act.

 

(i) The Parties consent
to the jurisdiction of the Federal District Court for the district in which the
arbitration is held for the enforcement of these provisions and the entry of
judgment on any award rendered hereunder (including after review by the Appeal
Arbitrator

 

53

 

where such an appeal is pursued). Should such
court for any reason lack jurisdiction, any court with jurisdiction shall act
in the same fashion.

 

(j) Each Party has the
right before or, if the arbitrator(s) cannot hear the matter within an
acceptable period, during the arbitration to seek and obtain from the
appropriate court provisional remedies such as attachment, preliminary
injunction, replevin, etc. to avoid irreparable harm, maintain the status
quo, or preserve the subject matter of the arbitration.

 

a.                                       EACH PARTY
HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY.

 

b.                                      EACH PARTY
HERETO WAIVES ANY CLAIM TO PUNITIVE, EXEMPLARY, CONSEQUENTIAL, SPECIAL OR
INDIRECT DAMAGES INCLUDING LOSS OF PROFITS FROM THE OTHER.

 

c.                                       EACH PARTY
HERETO WAIVES ANY CLAIM FOR ATTORNEYS’ FEES AND COSTS AND PREJUDGMENT INTEREST
FROM THE OTHER.

 

20.02       Mediation.  (a) Any dispute, controversy or claim
arising out of or related to this agreement, or the interpretation,
application, breach, termination or validity thereof, including any claim of
inducement by fraud or otherwise, which claim would, but for this provision, be
submitted to arbitration shall, before submission to arbitration, first be
mediated through non-binding mediation in accordance with The CPR Mediation
Procedure then in effect of the CPR Institute for Dispute Resolution (CPR)
available at www.cpradr.org/m_proced.htm, except where that procedure conflicts
with these provisions, in which case these provisions control.  The mediation shall be conducted in Trenton,
New Jersey and shall be attended by a senior executive with authority to
resolve the dispute from each of the operating companies that are Parties.

 

(b) The mediator shall
be neutral, independent, disinterested and shall be selected from a
professional mediation firm such as ADR Associates or JAMS/ENDISPUTE or CPR.

 

54

 

(c) The Parties shall
promptly confer in an effort to select a mediator by agreement.  In the absence of such an agreement within 10
days of initiation of the mediation, the mediator shall be selected by CPR as
follows: CPR shall provide the parties with a list of at least 15 names from
the CPR Panels of Distinguished Neutrals. Each Party shall exercise challenges
for cause, two peremptory challenges, and rank the remaining candidates within
5 Business Days  of receiving the CPR
list.  The Parties may together interview
the three top-ranked candidates for no more than one hour each and, after the
interviews, may each exercise one peremptory challenge.  The mediator shall be the remaining candidate
with the highest aggregate ranking.

 

(d) The mediator shall
confer with the Parties to design procedures to conclude the mediation within
no more than 45 days after initiation. 
Under no circumstances may the commencement of arbitration under Section 20.01
above be delayed more than 45 days by the mediation process specified herein
absent contrary agreement of the parties.

 

(e) Each Party agrees
not to use the period or pendency of the mediation to disadvantage the other
Party procedurally or otherwise.  No
statements made by either side during the mediation may be used by the other or
referred to during any subsequent proceedings.

 

(f) Each Party has the
right to pursue provisional relief from any court, such as attachment,
preliminary injunction, replevin, etc., to avoid irreparable harm, maintain the
status  quo, or preserve the subject matter of the arbitration,
even though mediation has not been commenced or completed.

 

20.03.      Relationship of the Parties.  The relationship of Buyer and Manufacturer
established by this Agreement is that of independent contractors, and nothing
contained herein shall be construed to (i) give either Party any right or
authority to create or assume any obligation of any kind on behalf of the other
or (ii) constitute the Parties as partners, joint venturers, co-owners or
otherwise as participants in a joint or common undertaking.

 

55

 

20.04       Resources.  Buyer and Manufacturer recognize and agree
that their respective employees are valuable members of their respective
organizations.  In the event Manufacturer
or Buyer desires to directly solicit for employment or employ one of such Buyer’s
employees or Manufacturer’s employees, as the case may be, then Manufacturer
shall, if possible under the circumstances, notify Buyer in advance of such
employment and vice versa.  Failure to so
notify shall not be a breach of this Agreement. 
This provision shall have no impact on the indirect solicitation of
either Party’s employees and shall impose no obligations or requests for
cooperation in connection with such indirect solicitation (e.g., employment ads
in any medium, calls from employment agencies, etc.).

 

20.05       Entire Agreement.  It is the mutual desire and intent of the
Parties to provide certainty as to their respective future rights and remedies
against each other by defining the extent of their mutual undertakings as
provided herein.  The Parties have, in
this Agreement and the schedules which are attached hereto and are incorporated
herein by reference, incorporated all representations, warranties, covenants,
commitments and understandings on which they have relied in entering into this
Agreement, and, except as provided for herein, neither Party makes any covenant
or other commitment to the other concerning its future action.  Manufacturer acknowledges that any
discussions that Manufacturer and its employees and representatives have had
with Buyer and its employees and representatives and any commitments that
either Party may have made in the course of making the business arrangements
covered by this Agreement and negotiating the terms hereof, are not binding on
the Parties if not specifically included in this Agreement.  Accordingly, this Agreement (i) constitutes
the entire agreement and understanding between the Parties with respect to the
subject matter hereof and there are no promises, representations, conditions,
provisions or terms related thereto other than those set forth in this
Agreement and (ii) supersedes all previous understandings, agreements and
representations

 

56

 

between
the Parties, written or oral.  No
modification, change or amendment to this Agreement shall be effective unless
in writing signed by each of the Parties hereto, except as otherwise
specifically permitted herein.

 

20.06       Headings. The Article and Section headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning and interpretation of this Agreement.

 

20.07       Notices.  All notices and other communications
hereunder shall be in writing.  All
notices hereunder of an Indemnity Claim, a Force Majeure Event, default or
breach hereunder, or, if applicable, termination or renewal of the Term hereof,
or any other notice of any event or development material to this Agreement
taken as a whole, shall be delivered personally, or sent by national overnight
delivery service or postage pre-paid registered or certified mail, and shall be
deemed given:  when delivered, if by
personal delivery or overnight delivery service, provided such delivery is on a
Business Day and if not, then on the next Business Day; or if so sent by mail, five
(5) Business Days after deposit in the mail, and shall be addressed:

 

if to
Manufacturer, to it at:16751 Trans Canada Highway

 

	
   

  	
  Kirkland, Québec, Canada H9H 4J4

  
	
   

  	
  Attn: President

  
	
   

  	
  Facsimile:***

  
	
   

  	
   

  
	
  with a copy to:

  	
  DRAXIS
  Health Inc.

  
	
   

  	
  16751
  Trans Canada Highway

  
	
   

  	
  Kirkland,
  Québec, Canada H9H 4J4

  
	
   

  	
  Attn:
  General Counsel and Secretary

  
	
   

  	
  Facsimile:***

  

 

57

 

	
  If to Buyer:

  	
  Johnson &
  Johnson Consumer Companies, Inc.

  
	
   

  	
  199
  Grandview Road

  
	
   

  	
  Skillman,
  NJ 08558

  
	
   

  	
  Attention:
  Director, Contract Manufacturing

  
	
   

  	
   

  
	
  With a copy to:

  	
  Johnson &
  Johnson

  
	
   

  	
  Office
  of General Counsel

  
	
   

  	
  One
  Johnson & Johnson Plaza

  
	
   

  	
  New
  Brunswick, NJ 08933

  
	
   

  	
  Attn:***

  

 

or
to such other place as either Party may designate by written notice to the other
in accordance with the terms hereof.  All
other notices or requests for agreements or approvals by one Party to another
which are of an operational nature shall be sent to in accordance with Schedule
G.

 

20.08       Failure to Exercise.  The failure of either Party to enforce at any
time for any period any provision hereof shall not be construed to be a waiver
of such provision or of the right of such Party thereafter to enforce each such
provision, nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy.  Remedies provided
herein are cumulative and not exclusive of any remedies provided at law.

 

20.09       Assignment and Subcontractors.  This Agreement may not be assigned by Buyer
without the prior written consent of the Manufacturer, except that Buyer may
assign its rights and/or obligations hereunder to any of its Affiliates or to a
successor to its business without Manufacturer’s consent. Manufacturer acknowledges
that Buyer has entered into this Agreement after consideration of the unique
talent, experience and particular attributes of 

 

58

 

Manufacturer
to manufacture and supply the Product. 
Therefore, this Agreement and all rights and obligations hereunder are
personal to Manufacturer and may not be assigned or transferred by Manufacturer
without the express written consent of Buyer, which consent may be withheld or
given in Buyer’s discretion, except for any corporate reorganization of the
Manufacturer in which the ultimate control of the Manufacturer shall be the
same as the control on the Effective Date for which no consent shall be
necessary. Any such assignment or attempted assignment or transfer in the
absence of the prior written consent of Buyer shall be void and without effect
at the option of the Buyer.  Subject to
the foregoing sentence, this Agreement shall bind and inure to the benefit of
the Parties hereto and their respective successors and assigns.  Manufacturer shall not subcontract any part
of the manufacturing, packaging or supplying of the Products, testing
procedures or any of its other obligations hereunder to a third party without
the prior written consent of Buyer which shall not be unreasonably withheld or
delayed.

 

20.10       Severability.   In the event
that any one or more of the provisions (or any part thereof) contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, then to the
maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any
other such instrument.  Any term or
provision of this Agreement which is invalid, illegal or unenforceable in any
jurisdiction shall, to the extent the economic benefits conferred by this
Agreement to both Parties remain substantially unimpaired, not affect the
validity, legality or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction.

 

20.11       Further
Assurances.  Upon reasonable request
from Buyer therefor, Manufacturer shall provide to Buyer, promptly, any Product samples, manufacturing information and
other information as is necessary for Buyer to complete or obtain U.S. or
foreign registration (including reimbursement arrangements) or approval in any
territory where

 

59

 

Buyer is allowed to sell product or use technology. The
Product samples shall be provided at the Price and the delivery costs for same
shall be at the sole expense of the Buyer.

 

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

 

20.13       Expenses.  Each Party shall pay all of its own fees and
expenses (including all legal, accounting and other advisory fees) incurred in
connection with the negotiation and execution of this Agreement and the
arrangements contemplated hereby.

 

20.14       Survival.   The final sentence of Section 5.02, Section 8.06,
and Articles 11, 14, 15, 16, 17, 19 and 20 shall survive the termination of
this Agreement in accordance with the respective terms thereof.  Following the termination or expiration,
Manufacturer shall continue to provide marketed stability storage of Products
and testing for Products produced at Manufacturer’s Facilities as outlined in
Product Specifications.  Manufacturer
shall invoice Buyer for such services in the amount indicated on Schedule A on
a per-occurrence basis.

 

60

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed by their duly
authorized respective representatives as of the day and year first
above written.

 

 

JOHNSON &
JOHNSON CONSUMER COMPANIES, INC.

 

 

	
  By:

  	
  /s/***

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	 

	
  Name:

  	
  ***

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Title:
  

  	
  Vice
  President, Procurement

  	
   

  	
   

  	 

								

 

61

 

DRAXIS
PHARMA,

 

a
division of DRAXIS Specialty Pharmaceuticals Inc.

 

 

	
  By:

  	
  /s/***

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:
  

  	
  ***

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  
						

 

62

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