Document:

Exhibit 10.24 to Vascular Solutions, Inc. Form 10-K for fiscal year ended December 31, 2006

EXHIBIT 10.24

 

THROMBIN JMI® SUPPLY AGREEMENT

 

This THROMBIN SUPPLY AGREEMENT (this “Agreement”) is entered into as of January 9, 2007, (the “Effective Date”), by and between Vascular Solutions, Inc., a Minnesota corporation, with its offices at 6464 Sycamore Court, Minneapolis, Minnesota  55369 (“VSI”) and King Pharmaceuticals, Inc., a Tennessee corporation, with its offices at 501 Fifth Street, Bristol, Tennessee 37620 (“King”). King and VSI are also referred to herein individually as a “Party” and collectively as the “Parties.”

 

WHEREAS, King and VSI are parties to that certain Device Supply Agreement dated as of even date with this Agreement (the “Device Supply Agreement”), under which VSI will manufacture and supply to King and King will purchase from VSI certain Devices (as defined herein); and 

WHEREAS, King wishes to provide VSI with Product (as defined herein) for VSI’s use in its manufacture as part of a tolling arrangement to supply King with the Devices; and

WHEREAS, King wishes to sell and VSI wishes to purchase Product for VSI’s own use outside of the Field (as defined herein); and

WHEREAS, subject to the terms and conditions set forth in this Agreement, VSI wishes to have King manufacture and supply and King wishes to manufacture and supply the Product to VSI.

NOW, THEREFORE, in consideration of the foregoing, the mutual promises and covenants of the Parties contained therein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:

 

ARTICLE I. DEFINITIONS

	
             
 	
            As used herein, the following terms have the following meanings:
 

 

	
             
  	
            Section 1.1
 	
            “Act” has the meaning set forth in Section 5.3.
 

** The appearance of a double asterisk denotes
confidential information that has been omitted from the exhibit and filed separately, accompanied by a confidential treatment
request, with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

 

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Section 1.2            “Affiliate” means, with respect to any Person, any Persons directly or indirectly controlling, controlled by, or under common control with, such Person. For purposes hereof, the term “controlled” (including the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the direct or indirect ability or power to direct or cause the direction of management policies of such Person or otherwise direct the affairs of such Person, whether through ownership of voting securities or otherwise.

Section 1.3            “Agreement” has the meaning set forth in the preamble hereto. 

Section 1.4            “Applicable Law” means all laws, rules, regulations, including any rules, regulations, guidelines, guidances or other requirements of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental Authority that may be in effect from time to time in the Territory applicable to this Agreement or the activities contemplated hereunder, including the FDCA.

Section 1.5            “Business Day” means a day other than Saturday, Sunday or any day on which banks located in New York are authorized or obligated to close. Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.

Section 1.6            “Certificate of Analysis” means certificates substantially in the form attached hereto in Exhibit B, evidencing the analytical tests conducted on a specific lot of Product and setting forth, inter alia, the items tested, specifications, and test results. 

Section 1.7            “C.F.R.” means the United States Code of Federal Regulations. 

Section 1.8            “cGMP” shall mean current Good Manufacturing Practices as promulgated under and in accordance with the FDCA, 21 C.F.R. (Parts 210, 211, 600 and 610), as the same may be amended or re-enacted from time to time and the ICH guidelines for Good Manufacturing Practices for Active Pharmaceutical Ingredients issued November 10, 2000.

Section 1.9            “Confidential Information” shall have the meaning set forth in the License Agreement.

Section 1.10          “Confirmed Firm Order” has the meaning set forth in Section 2.6(b). 

Section 1.11          “Deviation” has the meaning set forth in Section 2.2. 

Section 1.12          “Device Supply Agreement” has the meaning set forth in the preamble hereto.

Section 1.13          “Devices” means all medical devices described in Exhibit A-1 of the Device Supply Agreement (as amended from time to time), developed, owned, or controlled by VSI having application in the Field. 

	
             
  	
            Section 1.14
 	
            “Effective Date” has the meaning set forth in the preamble hereto.
 

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Section 1.15          “Excess Product” has the meaning set forth in Section 2.7(c)(iii).

Section 1.16          “Exploit” means to make, have made, import, use, sell, offer for sale or otherwise dispose of a product or process, including the research, development, registration, modification, enhancement, improvement, Manufacture, storage, formulation, optimization, export, transport, distribution, promotion or marketing of a product or process. 

Section 1.17          “Facility” means, as the context may require, the facility of King located at Middleton, Wisconsin, and the facilities of VSI located at Plymouth and Maple Grove, Minnesota.

Section 1.18          “FDA” means the United States Food and Drug Administration and any successor agency thereto.

Section 1.19          “FDCA” means the federal Food, Drug, and Cosmetic Act, as amended, which is contained in Title 21 of the U.S. Code, section 301 et seq., as amended and the regulations promulgated thereunder from time to time.

Section 1.20          “Field” means Hemostatic Devices with or without active hemostats in all areas outside catheterization laboratories (cardiac and peripheral), electrophysiology laboratories, and holding and recovery rooms for all such laboratories. 

Section 1.21          “Firm Order” means a written irrevocable firm purchase order for Product, which order shall include a delivery schedule specifying the requested delivery date and quantity for each Product ordered, and the location to which shipment of the Product is to be delivered.

Section 1.22          “Forecasts” means the King Device Forecast and the VSI Device Forecast.

Section 1.23          “Governmental Authority” means any governmental agency, board or commission or other governmental or regulatory authority or other instrumentality of the United States, any state, county, city or other political subdivision within the United States or any other jurisdiction within the Territory (including the FDA). 

Section 1.24          “Hemostatic Devices” means medical devices, whether external, implanted, absorbable or otherwise, intended to produce hemostasis by accelerating the clotting process of blood.

Section 1.25          “ICH” means the International Conference for Harmonization.

Section 1.26          “Indemnification Claim Notice” has the meaning set forth in Section 7.3(a).

Section 1.27          “Indemnified Party” has the meaning set forth in Section 7.3(a).

Section 1.28          “Indemnifying Party” has the meaning set forth in Section 7.3(a).

Section 1.29          “Initial Term” has the meaning set forth in Section 6.1.

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Section 1.30          “King” has the meaning set forth in the preamble hereto.

Section 1.31          “King Device Forecast” has the meaning set forth in Section 2.6(a)(i).

Section 1.32          “King Supplied Product” means topical thrombin U.S.P. (bovine origin) marketed by King under the trademark Thrombin-JMI® as further described in Exhibit A and supplied by King to VSI in the vial form delivered to it by King hereunder without any additional processing by VSI or other changing or removing from such vial form for use by VSI to manufacture and supply Devices to King under the Device Supply Agreement as well as for its own use outside of the Field.

Section 1.33          “King Indemnified Parties” has the meaning set forth in Section 7.2.

Section 1.34          “License Agreement” means that License Agreement between VSI, King, King’s wholly owned subsidiary, King Pharmaceuticals Research and Development, Inc. as of even date with this Agreement.

Section 1.35          “Losses” has the meaning set forth in Section 7.1.

Section 1.36          “Manufacture” and “Manufacturing” means the manufacturing, processing, formulating, packaging, labeling, storage, handling and quality control testing of the Product.

Section 1.37          “Marketing Authorization” means an approved New Drug Application, Pre-Market Approval Application or Pre-Market Notification (510(k)) as defined in the FDCA and the regulations promulgated thereunder, an approved Biologics License as defined in the Public Health Service Act and the regulations promulgated thereunder or any corresponding foreign application, registration or certification, necessary or reasonably useful to market any product in a country or regulatory jurisdiction in the Territory other than the United States, including applicable pricing and reimbursement approvals.

Section 1.38          “Materials” means all raw materials, excipients, components, packaging and labeling materials, and all other supplies of any kind used in connection with Manufacturing the Product.

Section 1.39          “Minimum Usage” has the meaning set forth in Section 2.7(c)(iii).

Section 1.40          “Other Agreements” means the Device Supply Agreement, the Device Quality Agreement, and the Thrombin-JMI® Quality Agreement, each entered into between VSI and King as of even date with this Agreement, and the License Agreement.

Section 1.41          “Party” and “Parties” have the meanings set forth in the preamble hereto.

Section 1.42          “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.

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Section 1.43          “PPI” means the Producer Price Index for the industry group Pharmaceutical Preparation Manufacturing (series identification number PCU325412325412).

Section 1.44          “Product” means the King Supplied Product and the VSI Modified Product.

Section 1.45          “Purchase Price” means the purchase price for the Product.

Section 1.46          “Regulatory Approval” means any and all approvals (including pricing and reimbursement approvals), licenses, registrations or authorizations of any Governmental Authority necessary to Exploit the Product in the United States and the European Union, including any (a) premarket approval or premarket notification of a Product, including any supplements and amendments thereto; (b) post-approval Marketing Authorizations (including any prerequisite Manufacturing approval or authorization related thereto); (c) labeling approval; and (d) technical, medical and scientific licenses.

Section 1.47          “Specifications” means the handling, composition, testing, production, packaging, storage and shipping procedures and specifications for the Product as may be amended, modified or supplemented from time to time in accordance with the terms hereof. The initial Specifications are attached hereto as Exhibit A.

Section 1.48          “Standard Potency” has the meaning set forth in Section 2.2.

Section 1.49          “Territory” means the world.

Section 1.50          “Term” has the meaning set forth in Section 6.1.

Section 1.51          “Testing Laboratory” has the meaning set forth in Section 4.3.

Section 1.52          “Thrombin-JMI® Quality Agreement” means the Thrombin-JMI® Quality Agreement executed by the Parties on or about the date hereof in relation to King’s supply to VSI of the Product hereunder, substantially in the form attached hereto as Exhibit E.

Section 1.53          “Un-Acceptable Product” has the meaning set forth in Section 4.1.

Section 1.54          “Variation” has the meaning set forth in Section 2.2.

Section 1.55          “VSI” has the meaning set forth in the preamble hereto.

Section 1.56          “VSI Device Forecast” has the meaning set forth in Section 2.6(a)(ii).

Section 1.57          “VSI Device Purchase Price” is the purchase price for the supply by King to VSI of Product in accordance with the VSI Device Forecast, as such purchase price is set forth in Exhibit C.

Section 1.58          “VSI Indemnified Parties” has the meaning set forth in Section 7.1.

Section 1.59          “VSI Modified Product” means topical
thrombin U.S.P. (bovine origin) marketed by King under the trademark Thrombin-JMI® as further described in
Exhibit A and supplied by King to VSI in a vial form that VSI
subjects to further processing or otherwise changes or removes from such vial form for use by VSI to manufacture and supply
Devices to King under the Device Supply Agreement as well as for its own use outside of the Field.

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ARTICLE II. MANUFACTURING

Section 2.1     Supply
Obligations. Subject to the terms and conditions hereof, King shall Manufacture and supply the Product on
a non-exclusive basis to VSI and VSI shall obtain from King such quantities of Product as VSI may order during the Term. King
shall Manufacture all Product delivered hereunder in accordance with the Specifications, this Agreement, and the Thrombin-JMI®
Quality Agreement and in compliance with Applicable Law. King shall supply to VSI and VSI shall obtain the Product from King
pursuant to Firm Orders or Confirmed Firm Orders submitted by VSI to King in accordance with Section
2.6(b) at a price determined in accordance with Section 2.3. King shall supply VSI up to ** of the VSI Forecasts for the appli cable period and shall exercise commercially reasonable
efforts to supply VSI with Product in excess of ** of any Forecast. 

Section 2.2     Standard
Potency, Variation, Deviation, and Reconciliation. King shall supply VSI with such quantity of Product as
VSI shall require. The Parties acknowledge that the Product will be supplied in vials that are labeled to show that the vials
contain 10,000 units and 5,000 units of Product. There are fluctuations in the actual volume of Product from lot to lot, and, for
purposes of this Agreement, the Parties agree to measure, tally, and reconcile the fluctuations in accordance with the provisions
of this Section 2.2. The average potency for each vial labeled 10,000 units is
actually ** units and the average potency for each vial labeled 5,000 units is ** units (“Standard
Potency”). The Parties agree that the Standard Potency varies by an acceptable ±** (plus or
minus **) from lot to lot (“Variation”). Any fluctuation beyond the
Variation is a deviation (“Deviation”). To determine the Deviation, the
Parties agree to use King’s standard method of measuring the Product’s potency, which is to determine, from a
representative sample vial from the lot, the average potency of that lot. The average potency for that lot will be stated in
King’s Certificate of Analysis in total units. Those units will then be tallied and reconciled on a bi-annual basis in
accordance with the provisions of this Section 2.2. King’s Certificate of
Analysis will, absent manifest error, be conclusive to determine any Variation and Deviation for any related Product. In no case
will Product be included for purposes of calculating a Deviation under this Section 2.2 when VSI uses such Product in the intact, unopened vial form in which it is delivered by King to VSI, by placing such
intact, unopened vial, into a kit that is marketed by either King or VSI. If a Deviation is negative, King shall be responsible
for the Deviation by supplying VSI with, at VSI’s election, and as applicable for the Product in question (i) Product
sufficient to correct the Deviation, in the case of Product supplied under a King Device Forecast, or (ii) a credit for the
Deviation, in the case of Product supplied under a VSI Device Forecast, or (iii) a refund of any Purchase Price overpaid that is
equal to the value of the Deviation, in the case of Product supplied under a VSI Device Forecast. If the Deviation is positive and
relates to Product supplied under a King Device Forecast, VSI shall use the Deviation exclusively for its manufacture and supply
to King of Devices under the Device Supply Agreement. If the Deviation is positive and relates to Product supplied under a VSI
Device Forecast, VSI shall pay King the VSI Device Purchase Price for the amount of such Deviation. 

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Section 2.3            Purchase
Price. King will provide Product to VSI in accordance with VSI Device Forecasts at the price set forth in
Exhibit C (the “Purchase Price”).
The Purchase Price shall be fixed for the Term, and subject only to the adjustments applied in accordance with Section 2.2, Section 2.8(b), Section 6.4(c), or for annual inflation, and in the case of an annual inflation adjustment, such
adjustment shall not exceed a maximum annual increase of three percent (3%), based on the change in the PPI for the preceding
year. Product supplied to VSI in accordance with King Device Forecasts shall be supplied to VSI free of charge. 

Section 2.4            Invoicing,
Payment, Currency. King shall promptly invoice VSI for all quantities of Product delivered in accordance
with any VSI Device Forecasts as well as with respect to any other payment hereunder. King shall issue no invoices for Products
delivered in accordance with any King Device Forecasts. Payment with respect to such Product delivered shall be due thirty (30)
days after receipt by VSI of the invoice with respect thereto; provided that if VSI
rejects such Product pursuant to Section 4.1, then payment shall be due within
thirty (30) days after receipt by King of notice from the Testing Laboratory that the invoiced Product is conforming or, subject
to Section 4.4, receipt by King of replacement Product, as the case may be. All
other payments shall be made thirty (30) days after receipt of an invoice for the same. In all cases, if VSI disputes any portion
of an invoice, it shall pay the undisputed portion and shall provide King with written notice of the disputed portion and its
reasons therefore, and VSI shall not be obligated to pay such disputed portion. The Parties shall use good faith efforts to
resolve any such disputes promptly. In the event of any inconsistency between an invoice and this Agreement, the terms of this
Agreement shall control. Payment of invoices shall be made in United States Dollars by wire transfer to an account designated in
writing by King.

	
             
  	
            Section 2.5
 	
            Costs and Expenses.
 

	
             
  	
            (a)
 	
            King shall be solely responsible for all costs and expenses incurred in connection with:
 

(i)        the Manufacture of Product for VSI (in vial form as delivered to VSI before further processing by VSI) in accordance with the Specifications, including without limitation, subject to Section 2.5(b), all costs and expenses of personnel, quality control testing, Manufacturing facilities and equipment, Materials, government sales, use excise, property or similar taxes or excises; and

(ii)      the delivery, transport and export of Product pursuant to a King Device Forecast.

	
             
  	
            (b)
 	
            VSI shall
 

(i)    be solely responsible for all costs and expenses incurred in connection with: (x) the delivery, transport and export of Product pursuant to a VSI Device Forecast; (y) VSI’s purchase of the Product for its further processing; and (z) VSI’s commercialization of its other devices and/or products incorporating the VSI Modified Product outside of the Field, including rebates, chargebacks, discounts, actual freight, freight insurance cost, government sales, use, excise, property, import, export or similar taxes or excises (except tax on income to King); and

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(ii)  reimburse King for the direct costs of the Materials paid for by King in reasonable reliance upon Forecasts (up to a maximum inventory of three (3) months based on average annual usage) submitted by VSI hereunder which become obsolete and which cannot be returned for a refund or otherwise used by King upon any change required by VSI in the packaging of the Product. At VSI’s option, VSI will pay for the return or destruction of the obsolete Materials; and

(iii) reimburse King for the direct costs and expenses that King incurs for Product packaging modifications in connection with any Product that VSI, in its sole discretion, has required, in which case King shall prepare and submit to VSI a good faith estimate of a budget of costs and expenses for the same and VSI shall reimburse King for all such VSI-approved costs and expenses. 

	
             
  	
            Section 2.6
 	
            Forecasts, Firm Orders, Batch Sizes.
 

(a)             Forecasts. Within
thirty (30) days after VSI has received an initial forecast from King under the Device Supply Agreement, VSI shall submit to King
a non-binding good faith, initial forecast of the quantities and delivery dates for Product that VSI estimates it will require on
a monthly basis during the following twelve (12) month period, and thereafter on the first Business Day of each calendar month
during the Term, provided that King has timely provided its forecasts for Devices
under the Device Supply Agreement, VSI shall deliver to King the following “Forecasts,” which shall be made in good faith given market and other information available to VSI: 

(i)     a twelve (12)-month rolling forecast by month, estimating the quantities of Product (“King Device Forecast”) that VSI expects to use on a monthly basis for its use to supply King with Devices under the Device Supply Agreement; and 

(ii)    a twelve (12)-month rolling forecast by month, estimating the quantities of Product (“VSI Device Forecast”) that VSI expects to use on a monthly basis for its own use outside of the Field. 

(b)             Firm
Orders. VSI shall order Product pursuant to a King Device Forecast by use of Firm Orders and shall
purchase Product pursuant to a VSI Device Forecast solely by use of Firm Orders. No terms or conditions contained in any Firm
Order, acknowledgment, invoice, bill of lading, acceptance, or other writing or document issued by either Party shall be effective
to the extent such terms or conditions are inconsistent with or modify the terms and conditions contained in this Agreement. VSI
shall submit each such Firm Order to King at least one hundred twenty (120) days in advance of the delivery date specified in each
Firm Order. If VSI requests changes to any Firm Order after receipt thereof by King, King shall use commercially reasonable
efforts to comply with such changes. King shall indicate its acceptance of each of VSI’s Firm Orders within five (5) Business
Days of its receipt of a Firm Order, which acceptance shall confirm the quantity ordered and delivery date set forth in such Firm
Order. Each request by VSI for changes to any Firm Order after receipt thereof by King shall be confirmed by King by facsimile or
email showing the revised quantity and delivery date of Product within five (5) Business Days after King’s receipt of such
change request (the “Confirmed Firm Order”). King shall promptly notify
VSI in writing if at any time King has reason to believe that King will not be able to
fill a Firm Order or Confirmed Firm Order for any Product in all material respects in accordance with the delivery schedule
specified therein by VSI and pursuant to the terms and conditions of this Agreement. 

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(c)            Batch Sizes. All quantities of Product ordered by VSI shall be consistent with King’s current minimum batch sizes for the Product as set forth in Exhibit A, or multiples thereof. King shall give VSI not less than six (6) months notice prior to changing its minimum batch sizes.

Section 2.7             Shipment and Delivery; Title and Risk of Loss; Handling of Product Supplied under King Device Forecasts. 

(a)            Terms. King
shall use commercially reasonable efforts to deliver the quantities of Product set forth in each Firm Order or Confirmed Firm
Order FCA (Incoterms 2000), VSI’s Facility by the delivery date set forth in the applicable Firm Order or Confirmed Firm
Order. All Product shall be packaged for shipment in accordance with the Specifications and in accordance with King’s
customary practices therefore, including obtaining at VSI’s cost all export authorizations as may be required, unless
otherwise specified in writing by VSI thirty (30) days prior to such shipment, in which event any extra costs incurred by King on
account of the packaging changes requested by VSI shall be promptly reimbursed by VSI. Each delivery of Product shall be
accompanied by a Certificate of Analysis and such other documents as may be required pursuant to the Thrombin-JMI® Quality
Agreement. King will warehouse the Product and will make prompt arrangements for shipment of the Product once the Product is
quality released by King and ready for shipment. 

	
             
  	
            (b)
 	
            Title and Risk of Loss.
 

(i)            Product Supplied under King Device Forecasts. Notwithstanding the FCA delivery term of Section 2.7(a), title and risk of loss to Product supplied under King Device Forecasts shall remain with King upon delivery to VSI’s Facility and shall remain with King throughout VSI’s use of such Product to manufacture and supply Devices to King. VSI shall provide King with a receipt of delivery of such Product with respect to each such shipment.

(ii)            Product Supplied under VSI Device Forecasts. Title and risk of loss to Product supplied under VSI Device Forecasts shall pass to VSI upon delivery to VSI’s Facility. VSI shall provide King with a receipt of delivery of such Product with respect to each such shipment.

	
             
  	
            (c)
 	
            Product Supplied under King Device Forecasts.
 

(i)            VSI
shall be and remain responsible for the proper care and handling of all quantities of Product supplied under King Device Forecasts
and shall account to King for the handling and disposition of all such quantities in accordance with the provisions of this
Section 2.7(c). Without limiting the preceding sentence, VSI shall hold all such
Product separate from other Materials owned or acquired by VSI and other third parties and shall insure and identify such Product
as the property of King. VSI shall store, handle, and protect such Product with the same level of care that it stores, handles,
and protects Product supplied to it under the VSI Device Forecast and in no event at less than a reasonable level of care, which
shall include taking all reasonable precautions to
ensure that all such Product is not subject to contamination, deterioration, destruction, or theft.

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(ii)            VSI shall keep adequate records of its usage of all Product supplied under a King Device Forecast during the Term. By the fifth (5th) business day of each month, VSI shall provide King with a rolling three (3) month report of VSI’s use of such Product, which report will show the beginning balances by batch, usage by batch, and ending balances by batch of all such Product in VSI’s inventory. VSI shall promptly report to King any and all incidents or occurrences pursuant to which any shipment of such Product is not used for VSI’s manufacture into Devices, including spillage, accidents, waste, spoilage, or other disposition.

(iii)           No
less than ** of all Product supplied to VSI under a King Device Forecast pursuant to this Section
2.7 shall be used in VSI’s manufacture of Devices (the “Minimum
Usage”), as determined by averaging the use of such Product on a quarterly basis; provided that, in
the event that the Minimum Usage is not met, King will supply VSI with additional Product, subject to the terms and conditions of
this Section 2.7(c)(iii). With respect to excess Product as a result of VSI’s
failure to meet the Minimum Usage (“Excess Product”), King shall be
entitled to charge VSI and VSI shall pay King the VSI Device Purchase Price for such Excess Product.

(iv)            King and its designated representatives shall have the right, upon reasonable notice, to visit VSI’s Facility for the purpose of conducting an inventory of the amount of Products that are King property held at VSI in accordance with the provisions of this Section 2.7(c).

(d)            Release. Prior to shipment of any Product, King shall perform release testing pursuant to the Specifications and as customarily conducted by King. With each shipment of Product, King shall provide to VSI a Certificate of Analysis and such other documents as may be required pursuant to the Thrombin-JMI® Quality Agreement.

	
             
  	
            Section 2.8
 	
            Failure or Inability to Supply Product.
 

(a)            Notification. In
the event that King, at any time during the Term, shall have reason to believe that it will be unable to supply VSI with the full quantity of Product forecasted to be ordered or actually ordered by VSI in a timely manner and in conformity with the warranty set forth in Section 5.2 (whether as a result of events described in Section 2.8(b) Section 2.8(c), Section 8.14, or otherwise), King promptly shall notify VSI thereof. Promptly thereafter, the Parties shall meet to discuss how VSI shall obtain such full quantity of conforming Product. Compliance by King with this Section
2.8(a) shall not relieve King of any other obligation or liability under this Agreement.

	
             
  	
            (b)
 	
            VSI Options.
 

(i)            King Device
Forecasts. If King fails to deliver the full quantity of Product under a King Device Forecast as specified in a Firm Order or
Confirmed Firm Order, as the case may be, by the required delivery date specified therein and in conformity with the warranty set
forth in Section 5.2, and as a result of such failure, VSI is unable to timely
manufacture and supply Devices to King, then VSI
shall be entitled to delay its delivery of Devices to King to the extent that its delay is attributable solely to such King
failure.

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(ii)            VSI
Device Forecasts. If King fails to deliver the full quantity of Product under a VSI Device Forecast as specified in a Firm Order
or Confirmed Firm Order, as the case may be, by the required delivery date specified therein and in conformity with the warranty
set forth in Section 5.2, VSI at its option, may: (i) cancel all or any portion of
such Firm Order or Confirmed Firm Order, as the case may be, in which event VSI shall have no liability with respect to the
portion of such order so cancelled; and/or (ii) accept late delivery of all or any portion of the Product specified in such Firm
Order or Confirmed Firm Order, in which event the VSI Device Purchase Price otherwise payable by VSI with respect to such delayed
Product shall be reduced by **.

(c)            Allocation of Capacity. If King is unable to meet Firm Orders or Confirmed Firm Orders, as the case may be, as the result of a shortage of production capacity at King’s Facility, King shall promptly notify VSI in writing of the facts, circumstances and reasons for such shortage of production capacity and King shall allocate its available production capacity to the production of the Product in such proportion (expressed as a function of equipment utilized) as the production equipment capacity actually utilized to meet orders for the Product over the previous twelve (12) month period bears to total production equipment capacity in such King Facility over that same period. 

Section 2.9            Subcontracting of Manufacture and Supply. During the Term, King may subcontract its obligations to manufacture and supply Product under this Agreement to a third-party, without the prior written approval of VSI. The terms of any subcontract will be in writing, and will be consistent with this Agreement. No subcontracting will release King from its responsibility for its obligations under this Agreement. King will be responsible for the work and activities of each of King’s subcontractors, including compliance with the terms of this Agreement. 

Section 2.10            Material Safety. King shall provide to VSI in written form all public information regarding the handling, precautions, toxicity and hazards associated with the Product.

Section 2.11            Taxes. Each of the Parties agrees that, for the purposes of Internal Revenue Code Section 199, because King retains title and risk of loss to Product delivered pursuant to a King Device Forecast, that King will be treated as being the manufacturer of the Devices and VSI agrees not to take a position inconsistent with this provision on VSI’s federal or state income tax returns.

Section 2.12            Product Supplied Before Effective Date. On or before the Effective Date, King supplied Product to VSI under VSI purchase orders and the Parties agree that VSI shall use such Product exclusively for its own use and not for use in manufacturing Devices for King. All VSI purchase orders outstanding but unfilled on the Effective Date will be considered terminated by this Agreement and replaced by Firm Orders placed under this Agreement.

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ARTICLE III. QUALITY AND REGULATORY MATTERS

Section 3.1            Permits. Except as otherwise set forth in this Agreement, each Party shall, at such Party’s sole cost and expense, maintain in full force and effect all necessary licenses, approvals, permits, and other authorizations required by Applicable Law to carry out such Party’s duties and obligations under this Agreement.

	
             
  	
            Section 3.2
 	
            Testing and Quality Assurance.
 

(a)           King shall duly and punctually perform all of its obligations under and pursuant to the Thrombin-JMI® Quality Agreement. In connection therewith, King shall perform, or cause to be performed the tests required to be performed by King pursuant to the Thrombin-JMI® Quality Agreement on each lot of Product Manufactured pursuant to this Agreement before delivery to VSI, including, without limitation, release testing pursuant to the Specifications and as customarily conducted by King prior to shipment of Product. 

(b)           King will perform stability testing on the Product consistent with all Regulatory Approvals and will report any stability test failure of the Product to VSI within forty-eight (48) hours of confirming the results. In the event that King determines that the cause of the stability failure has affected a lot of Product that has been delivered to VSI, King will perform the appropriate testing of retained samples within five (5) days and will report the results of such tests to VSI within forty-eight (48) hours of the completion of such testing. 

Section 3.3            Recalls; Product Technical Complaints, Returns, Government Reporting.

(a)           Product Complaints,
Returns. VSI shall have the sole authority and responsibility to respond to any Governmental Authority, respond to all inquiries, complaints and adverse events relating to VSI Modified Product and, subject to Section 3.3(e) and Section 3.3(f), to handle all recalls and market withdrawals of VSI Modified Product in accordance with Applicable Laws, at VSI’s cost and expense, provided that in all cases, unless otherwise required to comply with any Applicable Laws or any decision, order, request or directive of a Governmental Authority, VSI shall release no communication into the marketplace regarding such complaints, medical complaints, recalls or
market withdrawals without first obtaining King’s consent to such communication, which shall not be unreasonably withheld. VSI will be responsible for complying with all federal, state, and local governmental reporting requirements regarding adverse drug events and quality matters, provided that, in each case, the Product is a VSI Modified Product. VSI shall be responsible in accordance with the provisions of the Device Supply Agreement and King shall assist VSI as VSI shall require, but King shall have no responsibility to respond to or be liable for such inquiries, complaints, or adverse events. King shall have no responsibility for returns of VSI Modified Product, which shall be the sole responsibility of VSI. For King Supplied Product, King shall have the sole authority and responsibility to respond to any Governmental Authority, to all inquiries, complaints, and adverse events in relation to the Product. 

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(b)           Testing. If,
as a result of a reported complaint or adverse drug event, testing of the Product is required, VSI will, at VSI’s cost and
expense, perform the required testing in accordance with Specifications for such Product if the Product in question is a VSI Modified Product and King will, at King’s cost and expense, perform the required testing in accordance with Specifications for such Product if the Product in question is a King Supplied Product. VSI shall be responsible for making the applicable report to the FDA or any other Governmental Authority provided that the reported complaint or adverse drug event is related to VSI Modified Product and King shall be responsible for making the applicable report to the FDA or any other Governmental Authority provided that the reported complaint or adverse drug event is related to King Supplied Product.

(c)  Disputes. If the Parties disagree as to which Party is responsible, King and VSI representatives shall attempt to resolve such dispute. If the representatives cannot resolve such dispute, the samples of the relevant Product shall be jointly submitted by King and VSI to a Testing Laboratory and the test results obtained by such laboratory shall be final and controlling. The fees and expenses of the Testing Laboratory testing shall be borne entirely by the Party whose analysis was in error. 

(d)  Recalls. Each Party shall promptly (but in any case, not later than forty-eight (48) hours) notify the other Party in writing of any decision, order, request or directive of a Governmental Authority to recall, withdraw or field correct the King Supplied Product or the VSI Modified Product, as the case may be. King shall promptly (but in any case, not later than forty-eight (48) hours) notify VSI of any voluntary decision to recall, withdraw or field correct King Supplied Product and King shall be solely responsible for determining whether to issue a recall, withdrawal, or field correction for King Supplied Product (but shall comply with all Applicable Laws in making such determination) and for the cost and expense of any such recall, withdrawal or field correction; provided,
that each such responsible Party shall give due consideration to all comments timely made by the other Party relating to testing of the relevant Product and shall notify the other Party in writing if the responsible Party declines to address any such comments, stating the reason therefor. If any recall, market withdrawal or field correction is not due to King’s Manufacture of the Product, then King shall be relieved of King’s obligations to supply the Product until the cause of such recall, withdrawal or field correction has been resolved to the satisfaction of the Parties and the applicable Governmental Authority. 

(e)  Costs of Recall. In the event that King is required to recall, withdraw, or undertake a field correction of any King Supplied Product in accordance with the provisions of this Section 3.3(e), in such event, King shall bear the actual cost of conducting such action or withdrawal, including costs imposed by the applicable Governmental Authority(ies) such as costs for detention and inspection, in accordance with the recall guidelines of the applicable Governmental Authority(ies) or standard U.S. medical device industry practices; and, at the sole election of VSI, King shall either:

(i)            in the case of Product supplied under a King Device Forecast or a VSI Device Forecast, supply Product, without charge to VSI, in an amount sufficient to replace the amount of the Product recalled, withdrawn, or subjected to field correction; or

(ii)            in the case of Product supplied
under a VSI Device Forecast, refund to VSI, or give credit to VSI against outstanding receivables due from VSI against the VSI
Device Purchase Price for shipments of the Product to be delivered to VSI in the future, in amounts equal to the VSI Device Purchase Price
paid by VSI to King for Product so recalled, withdrawn, or subjected to field correction, plus the reasonable transportation costs
incurred by VSI and not recovered by VSI in respect of such Product recalled, withdrawn, or subjected to field correction.

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(f)           Government Inquiries. If either Party shall be contacted by any Governmental Authority for any regulatory purpose pertaining specifically to this Agreement or to the Product, such Party shall immediately notify the other Party. Either Party may permit unannounced inspections of the Product or its Facility by a Governmental Authority with competent jurisdiction and may respond to the extent necessary to comply with such Party’s obligations under Applicable Law. 

(g)           Medical Inquiries. King
shall handle all medical inquiries concerning the Product in the Territory. King shall notify VSI of any medical information requests or medical inquiries involving any VSI Modified Product.

Section 3.4            Letter
of Reference. At King’s expense, King shall provide VSI with reasonable assistance to support its filings and submissions with Governmental Authorities with respect to the Devices, and to this end, upon VSI’s written request, King shall promptly provide a letter of authorization to the relevant Governmental Authority allowing such Governmental Authority to review King’s biologics license application relating to the Product and to reference that application and the data therein in its consideration and evaluation of VSI’s filings and submissions, which letter shall be substantially in the form attached hereto as Exhibit D. Accompanying such request to King, VSI shall also provide King with a copy of any proposed filing or submission
with any Governmental Authority with respect to the Devices that include any information relating to King, including information from King’s quality assurance standard operating procedures. VSI must receive King’s consent (which King may withhold in its discretion) with respect to such filing or submission before VSI may file or submit the same with such Governmental Authority. All of King’s proprietary information with respect to the Product shall be subject to reasonable protection and VSI shall comply with King’s rules and procedures with respect thereto. Notwithstanding any of the foregoing, nothing in this Agreement shall require King to provide VSI with any information pertaining to King’s batch records for the Product or with any information pertaining to the proprietary processes utilized in manufacturing the Product, all such information being deemed King’s trade secrets.

Section 3.5            Audit by VSI. VSI and its designated representatives shall have the right, upon reasonable notice, to audit records of King for the purpose of determining King’s compliance with the obligations set forth in Section 5.2, the terms of this Agreement, and any Firm Order or Confirmed Firm Order. This right to audit shall be subject always to the provisions of Section 3.4 concerning King’s trade secrets and their protection. This right to audit shall extend throughout the Term of this Agreement and for one (1) year after expiration or termination of this Agreement.

	
             
  	
            Section 3.6
 	
            Maintenance of Facility.
 

(a)     King shall maintain the Facility where it Manufactures the Product,
Materials and such related equipment in a state of repair and operating efficiency consistent with the requirements of the
Specifications, the Regulatory Approvals, cGMP and all other Applicable Laws. 

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(b)           King may Manufacture Product at an alternate facility in King’s sole discretion and subject to approval of the applicable Regulatory Authorities, provided that King shall bear all costs of transferring the Manufacture of Product to such alternate facility. 

Section 3.7            Additional Information. Subject always to the provisions of Section 3.4 concerning King’s trade secrets and their protection, each Party shall provide to the other in a timely manner, but in no event less than sixty (60) days prior to the due date of such Party’s annual report to the FDA or any other Governmental Authority with respect to the Product, all information in written form that such Party requests regarding the Product in order to comply with Applicable Laws. 

Section 3.8            Manufacturing Records. King shall maintain, or cause to be maintained, (i) all records necessary to comply with cGMP and all other Applicable Law relating to the Manufacture of Product, and (ii) all manufacturing records, standard operating procedures, validation records, equipment log books, batch records, laboratory notebooks and all raw data relating to the manufacturing of Product and all records relating to the shipment of the Product. All such material shall be retained for such period as may be required by cGMP and all other Applicable Law.

ARTICLE IV.

INSPECTION OF PRODUCT

Section 4.1            Inspection
by VSI. Within thirty (30) days after delivery of Product to the destination specified by VSI, VSI shall
visually inspect such Product in accordance with its customary procedures. VSI shall advise King in writing if it is rejecting a
shipment due to obvious physical damage, obvious packaging defect or quantity discrepancies that are evident upon such visual
inspection of the packaged Product as shipped by King. VSI shall have no obligation to inspect the Product beyond the visual
inspection provided for in this Section 4.1. If a visual inspection reveals
evidence of defects in the Product, or VSI or its designee determines that the Product does not conform to the Specifications
(“Un-Acceptable Product”), VSI shall notify King in writing within the
thirty (30)-day period after such inspection to identify the Product or portion thereof which VSI will return because such Product
is Un-Acceptable Product. VSI’s failure to deliver such notice to King shall not relieve King of its obligation to supply
Product in compliance with this Agreement.

Section 4.2            Investigation by King. King shall undertake reasonably appropriate investigation regarding all alleged Un-Acceptable Product and shall notify VSI whether it has confirmed such alleged non-conformity within thirty (30) days after receipt of such notice from VSI. 

Section 4.3            Disputes over
Product. If King, after good faith consultation with VSI, disputes any finding by VSI that the Product is
Un-Acceptable Product, then representative samples of such Product shall be forwarded for analysis to an independent testing
laboratory or other appropriate expert mutually acceptable to the parties (the “Testing
Laboratory”) for 

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evaluation, which analysis shall be performed in
compliance with applicable FDA regulations and with reference to the Specifications. The parties shall cooperate with the Testing
Laboratory’s reasonable requests for assistance in connection with its evaluation hereunder. The findings of the Testing
Laboratory regarding whether the Product was Un-Acceptable Product, absent manifest error, shall be binding upon the parties. The
expenses of the Testing Laboratory shall be borne by King if the testing confirms the nonconformity and otherwise by VSI.

Section 4.4            Replacement of
Product that is Un-Acceptable Product. If the Testing Laboratory or King confirms that any Product is Un-Acceptable Product, King promptly shall, at King’s cost and expense, including shipping costs and at VSI’s option: (i) with respect to Product supplied to VSI under a King Device Forecast or a VSI Device Forecast, supply VSI with a conforming quantity of Product at King’s expense (if there is a limited supply of Product  available to replace Un-Acceptable Product, then King shall ship to VSI such quantities of conforming Product as are available and, for Product supplied under a VSI Device Forecast, shall promptly reimburse VSI for amounts paid for the remaining quantity of such Un-Acceptable Product) or (ii) with respect to Product supplied to VSI under a VSI Device Forecast,
reimburse VSI the VSI Device Purchase Price paid by VSI with respect to such Un-Acceptable Product, if already paid. In addition, King promptly shall reimburse VSI for all reasonable costs incurred by VSI with respect to such Un-Acceptable Product, including costs of recalls, market withdrawals, returns and destruction, which costs VSI shall have the right to offset against any payments owed by VSI to King under this Agreement. King may only rework Un-Acceptable Product if there is a validated and FDA-approved process to rework the shipment or lot and VSI agrees in advance to the reworking of Un-Acceptable Product. King shall instruct VSI as to the disposition of any Product ordered or portion thereof determined to be Un-Acceptable Product. At the sole option of King, said Un-Acceptable Product may be returned to King, at King’s expense, including shipping costs, or destroyed in an environmentally acceptable manner, in accordance with Applicable Laws, at King’s
expense.

ARTICLE V. REPRESENTATIONS AND WARRANTIES

Section 5.1            Mutual Representations and Warranties. Each Party hereby represents and warrants to the other Party, as of the Effective Date, as follows:

(a)           such Party (i) is duly formed and in good standing under the laws of the jurisdiction of its formation, (ii) has the power and authority and the legal right to enter into this Agreement and perform its obligations herein, and (iii) has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations herein;  

(b)           upon execution, this Agreement will have been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditor rights, and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered a proceeding at law or equity;

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(c)           all necessary consents, approvals and authorizations of all regulatory and governmental authorities and other Persons required to be obtained by such Party in connection with the execution and delivery of this Agreement and the performance of its obligations herein have been obtained, including, without limitation, any and all Regulatory Approvals for the Facility; and

(d)           the execution and delivery of this Agreement and the performance of such Party’s obligations herein (i) do not and will not conflict with or violate any requirement of Applicable Law or any provision of the articles of incorporation, bylaws or limited partnership agreement of such Party and (ii) do not and will not conflict with, violate, or breach, or constitute a default or require any consent under, any contractual obligation or court or administrative order by which such Party is bound.

Section 5.2            Additional Representations, Warranties and Covenants of King. King warrants, represents and covenants as of the Effective Date and, unless otherwise set forth below, at all times during the Term, that:

(a)           each of the representations, warranties and covenants made by King in each of the Other Agreements are true and correct as of the date they are made;

(b)           it has facilities, personnel, experience and expertise sufficient in quality and quantity to perform its obligations hereunder, (ii) it shall so perform with reasonable due care and in conformity with current generally accepted standards and procedures and (iii) its management shall establish appropriate quality assurance, quality controls and review procedures;

(c)           as of the Effective Date, it has access to sufficient supplies of Materials, components and other required resources to perform the services required under this Agreement, and shall exercise commercially reasonable efforts to maintain access to sufficient supplies without interruption during the Term;

(d)           it has complied at the Effective Date, and shall comply during the Term, at its sole cost and expense, with (i) all Applicable Laws now in force or which may hereafter be in force, pertaining to the Products under this Agreement including those that concern: (A) equal employment and non-discrimination, (B) the FDA governing the promotion of drugs, (C) federal and state anti-kickback and (D) submission of false claims to governmental or private health care payors, and any laws, orders, regulations, rules or ordinances issued in addition to, as a supplement to or as a replacement of the foregoing, and (ii) applicable industry and professional standards including, without limitation, the PhRMA Code on Interactions with Healthcare Professionals;

(e)           the Manufacture and sale of the Product (in the vial form at the time of delivery of Product to VSI) by King pursuant to this Agreement will not infringe upon any patent or other proprietary rights of any third-party;

(f)           pursuant to the Generic Drug Enforcement Act of 1992, 21 U.S.C. § 335a, as may be amended or supplemented (the “Act”): 

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(i)           neither it, nor any of its Affiliates is currently debarred by the FDA under the Act. (The FDA’s debarment list appears at http://www.fda.gov/ora/compliance_ref/debar/); 

(ii)         neither it, nor any of its Affiliates is currently using or will use in any capacity in connection with the Manufacture and supply of Products any Person that is currently debarred by the FDA under the Act; and

(iii)         there have been no convictions of it, or any of its Affiliates for any of the types of crimes set forth in the Act within the five (5) years prior to the Effective Date.

(g)           neither it, nor any of its Affiliates is currently excluded from a federal or state health care program under Sections 1128 or 1156 of the Social Security Act, 42 U.S.C. §§ 1320a-7, 1320c-5 as may be amended or supplemented (the Department of Health and Human Services’ list of excluded individuals/entities appears at http://www.oig.hhs.gov/FRAUD/exclusions/listofexcluded.html); and

(h)           neither it, nor any of its Affiliates is otherwise currently excluded from contracting with the federal government (the excluded parties listing system appears at http://epls.arnet.gov). 

Section 5.3              Additional Representations, Warranties and Covenants of VSI. VSI warrants, represents and covenants that:

(a)           pursuant to the Generic Drug Enforcement Act of 1992, 21 U.S.C. § 335a (the “Act”) as may be amended or supplemented:

(i)            neither
it, its Affiliates nor any person or entity under its direction or control  is currently debarred by the Food and Drug
Administration under the Act (the FDA’s Debarment List appears at http://www.fda.gov/ora/compliance_ref/debar/); 

(ii)          neither it, its Affiliates nor any person or entity under its direction or control is currently using or will use in any capacity in connection with the Services any person or entity that is currently debarred by the Food and Drug Administration under the Act;

(iii)          there have been no convictions of it, its Affiliates or any person under its direction or control for any of the types of crimes set forth in the Act within the five (5) years prior to the date of this Agreement;

(b)           it shall immediately notify King if, at any time during the Term of this Agreement, VSI, its Affiliates or any person or entity under its direction or control is convicted of an offense that would subject it to debarment by the FDA; and

(c)           subject to Section 5.2(e) above, the Manufacture and sale of any products and devices outside the Field by VSI or its sublicensees or manufacturers using any Product supplied to VSI hereunder will not infringe upon any patent or other proprietary rights of any third-party.

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Section 5.4             Product
Warranty. King warrants that, at the time of delivery of Product to VSI: (a) such Product will have been Manufactured in accordance with cGMP and all Applicable Law; (b) such Product will meet the Specifications and will conform with the Certificate of Analysis; (c) such Product will not be adulterated or misbranded within the meaning of the FDCA, and similar provisions of the laws of other countries as to which Regulatory Approvals have been granted for the Product; (d) subject to Section 2.7(b)(i), title to such Product will pass to VSI as provided herein free and clear of any security interest, lien or other encumbrance; (e) such Product will have been manufactured in facilities that are in compliance with all Applicable Laws at the time
of such manufacture (including applicable inspection requirements of FDA and other Regulatory Authorities); (f) such Product is not an article that may not be introduced into interstate commerce under the provisions of Sections 404 or 505 of the FDCA; and (g) the expiration date of such Product shall be no earlier than eighteen (18) months, after the date of delivery thereof.

Section 5.5            Disclaimer of Other Warranties. EXCEPT AS SET FORTH IN THIS AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY.

Section 5.6            Terms of this Agreement. The Parties agree not to disclose any terms or conditions of this Agreement to any third Party without the prior consent of the other Party, except as required by Applicable Laws.

Section 5.7            Injunctive Relief. The Parties hereto understand and agree that remedies at law may be inadequate to protect against a breach of any of the provisions of this ARTICLE V. by either Party, its Affiliates or their employees. Accordingly, each Party may be entitled to the granting of injunctive relief by a court of competent jurisdiction against any action that constitutes any such breach of this ARTICLE V. .

ARTICLE VI. TERM AND TERMINATION

Section 6.1     Term. This Agreement shall become effective as of the Effective Date and shall remain in force until the tenth (10th) anniversary of the Effective Date, unless sooner terminated as provided in this ARTICLE VI. (the “Initial Term”). The Initial Term shall automatically be renewed for successive additional periods of one (1) year each unless sooner terminated as provided in this ARTICLE VI. . The Initial Term and any extension thereof shall be referred to herein as the “Term.”

Section 6.2     Termination. Without prejudice to any other provision of this Agreement expressly providing for termination of this Agreement, other remedies available to a Party hereunder, or at law or in equity, this Agreement may be terminated as follows:

(a)           At any time after the fifth (5th) anniversary of the Effective Date, VSI may terminate this Agreement at any time for any reason by giving King five (5) years prior written notice, provided that, the Device Supply Agreement has expired on its terms or the parties thereto have agreed to terminate the same;

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(b)           At any time after the fifth (5th) anniversary of the Effective Date, King may terminate this Agreement at any time for any reason by giving VSI five (5) years prior written notice;

(c)           Upon the expiration or termination of the Device Supply Agreement for any reason, King may immediately terminate from this Agreement the supply of Product under King Device Forecasts by written notice to VSI with immediate effect; and

	
             
  	
            (d)
 	
            This Agreement may be terminated at any time by either Party:
 

(i)           For Breach. Either Party may immediately terminate this Agreement without liability to the other Party if the other Party materially breaches this Agreement and fails to cure that breach within thirty (30) days after receiving written notice of the breach; or

(ii)          Regulatory Approval. Either Party may, upon notice to the other Party, immediately terminate this Agreement with respect to any Product without liability to either Party if, during the Term, the Regulatory Approval(s) necessary for marketing such Product in the Territory have been withdrawn or not granted.

Section 6.3            Insolvency or
Bankruptcy. In the event that a Party shall have become insolvent or bankrupt, or shall have made an
assignment for the benefit of its creditors, or there shall have been appointed a trustee or receiver of such Party for all or a
substantial part of its property, or any case or proceeding shall have been commenced or other action taken by or against such
Party, (as to which, if involuntarily commenced against such Party, such Party would not be able to obtain dismissal within ninety
(90) days after commencement thereof) in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts or any relief under any bankruptcy, insolvency, reorganization or other similar act or
law of any jurisdiction now or hereafter in effect, then such Party shall not be relieved in any respect of its obligations
hereunder, and, in addition to any other remedies available to it by law or in equity, the other Party may terminate this
Agreement immediately, in whole or in part, by written notice to such Party.

	
             
  	
            Section 6.4
 	
            Effect of Termination.
 

(a)           Upon VSI’s termination of this Agreement for any reason (except in the case of a VSI breach), all rights and privileges granted hereunder to VSI shall remain in full force and effect until all Product ordered and delivered hereunder has been sold by VSI, excluding returns of Product; and King will honor all submitted but unfilled Purchase Orders, provided that, King shall be entitled to seek advance payment for all such unfilled Purchase Orders and shall not be obligated to honor such Purchase Orders until King is satisfied that it will be paid for such Purchase Orders;

(b)           Unless otherwise agreed upon between the Parties, VSI agrees to continue to comply with all regulatory requirements relating to the Devices in the Territory as are imposed on a manufacturer of medical devices and King agrees to continue to comply with all those regulatory requirements relating to the Product in the Territory, including adverse event notification; and

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(c)           Unless otherwise agreed upon between the Parties, in the event of a termination of the Device Supply Agreement under (i) Sections 6.2(c) or 6.2(d)(ii) by either Party or (ii) under Section 6.2(d)(i) by King (for VSI’s breach), the VSI Device Purchase Price shall be adjusted pursuant to Exhibit C.

	
             
  	
            Section 6.5
 	
            Accrued Rights; Surviving Provisions.
 

(a)           Notwithstanding the giving of any notice of termination pursuant to this ARTICLE VI. , each Party shall continue to fulfill such Party’s obligations under this Agreement at all times until the effective date of any such termination.

(b)           Termination or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination or expiration.

(c)           The provisions of this Section 6.5, Section 3.8 (Manufacturing Records), ARTICLE V. (Reps and Warranties), ARTICLE VII. (Indemnification), and ARTICLE VIII. (Miscellaneous) shall survive any expiration or termination of this Agreement, and remain in full force and effect.

ARTICLE VII.

INDEMNIFICATION; INSURANCE; LIMITATIONS OF LIABILITY

Section 7.1            Indemnification
by King. King shall indemnify VSI, its Affiliates and their respective directors, officers, employees and
agents (the “VSI Indemnified Parties”), and defend and save each of them
harmless, from and against any and all third party claims, lawsuits, losses, damages, liabilities, penalties, royalties, costs and
expenses (including reasonable attorneys’ fees and disbursements) (collectively, “Losses”) incurred by any of them in connection with, arising from or occurring as a result of:
(i) the breach by King of any of its obligations under this Agreement; (ii) the breach, inaccuracy or rendering inaccurate of any
representation or warranty made by King in this Agreement; (iii) allegations that the Manufacture and supply of Product (in the
vial form at the time of delivery of Product to VSI) in accordance with the terms hereof infringes or misappropriates the patent,
trademark or other intellectual property rights of a third party; and (iv) any gross negligence or willful misconduct by King in
Manufacturing Product.

Section 7.2            Indemnification
by VSI. VSI shall indemnify King, its Affiliates and their respective directors, officers, employees and
agents (the “King Indemnified Parties”), and defend and save each of them
harmless, from and against any and all Losses incurred by any of them in connection with, arising from or occurring as a result
of: (i) the breach by VSI of any of its obligations under this Agreement, (ii) the breach, inaccuracy or rendering inaccurate of
any representation or warranty made by VSI in this Agreement, (iii) any gross negligence or willful misconduct by VSI or its
Affiliates; and (iv) in the case of this sub-paragraph (iv), to the extent such are not Losses covered by Section 7.1, (A) the manufacture and sale of the products and devices outside the Field by VSI or
its sublicensees or manufacturers using any Product supplied to VSI hereunder, and (B) the manufacture and/or other activities
undertaken to further process, change, or remove from the vial form, any VSI Modified Product supplied to VSI hereunder by
King.

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            Section 7.3.
 	
            Procedures.
 

(a)           Notice
of Claim. The indemnified Party (the “Indemnified Party”) shall give the indemnifying Party (the “Indemnifying Party”) prompt written notice (an “Indemnification Claim Notice”)
of any Losses or discovery of facts upon which such Indemnified Party intends to base a request for indemnification under
Section 7.1 or Section 7.2, but in
no event shall the Indemnifying Party be liable for any Losses that result from any delay in providing such notice except to the
extent that such failure to give notice materially prejudices the Indemnifying Party’s ability to defend such claim. Each
Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that
the nature and amount of such Loss are known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party
copies of all papers and official documents received in respect of any Losses. 

(b)           Control
of Defense. At its option, the Indemnifying Party may assume the defense of any Losses by giving written
notice to the Indemnified Party within thirty (30) days after the Indemnifying Party’s receipt of an Indemnification Claim
Notice. The assumption of the defense of a Loss by the Indemnifying Party shall not be construed as an acknowledgment that the
Indemnifying Party is liable to indemnify any Indemnified Party in respect of the Loss, nor shall it constitute a waiver by the
Indemnifying Party of any defenses it may assert against any Indemnified Party’s claim for indemnification. Upon assuming the
defense of a Loss, the Indemnifying Party may appoint as lead counsel in the defense of the Loss any legal counsel selected by the
Indemnifying Party. In the event the Indemnifying Party assumes the defense of a Loss, the Indemnified Party shall immediately
deliver to the Indemnifying Party all original notices and documents (including court papers) received by any Indemnified Party in
connection with the Loss. Subject to clause (c) below, if the Indemnifying Party assumes the defense of a Loss, the Indemnifying
Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in
connection with the analysis, defense or settlement of the Loss. In the event that it is ultimately determined that the
Indemnifying Party is not obligated to indemnify, defend or hold harmless an Indemnified Party from and against the Loss, the
Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including reasonable attorneys’
fees and costs of suit) incurred by the Indemnifying Party in its defense of the Loss with respect to such Indemnified Party.

(c)           Right to
Participate in Defense. Without limiting Section 7.3(b),
any Indemnified Party shall be entitled to participate in, but not control, the defense of any Loss and to employ counsel of its
choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s own expense unless (A)
the employment thereof has been specifically authorized by the Indemnifying Party in writing, (B) the Indemnifying Party has
failed to assume the defense and employ counsel in accordance with Section 7.3(b)
(in which case the Indemnified Party shall control the defense), or (C) the interests of the Indemnified Party and the
Indemnifying Party with respect to such Loss are sufficiently adverse to prohibit the representation by the same counsel of both
Parties under Applicable Law, ethical rules or equitable principles.

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(d)           Settlement. With
respect to any Losses relating solely to the payment of money damages and that will not result in the Indemnified Party’s
becoming subject to injunctive or other 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 consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate. With
respect to all other Losses, where the Indemnifying Party has assumed the defense of the Loss, the Indemnifying Party shall have
authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss; provided that it obtains the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld or delayed). The Indemnifying Party shall not be liable for any settlement or other disposition of a
Loss by an Indemnified Party that is reached without the written consent of the Indemnifying Party. Regardless of whether the
Indemnifying Party chooses to defend or prosecute any Loss, no Indemnified Party shall admit any liability with respect to, or
settle, compromise or dispose of, any Loss without the prior written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed). 

(e)           Cooperation. If the Indemnifying Party chooses to defend or prosecute any Loss, the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Loss, and making employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party sh

all reimburse the Indemnified
Party for all its reasonable out-of-pocket expenses in connection therewith. 

(f)           Expenses. Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any Loss shall be reimbursed on a calendar quarter basis in arrears by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party. 

Section 7.4            Insurance. Each
Party shall maintain insurance (either through purchase of a policy from a nationally recognized third party insurer or through
maintenance of a self-insurance program) against such risks and upon such terms (including coverages, deductible limits and
self-insured retentions) as is customary for the activities to be conducted by such Party under this Agreement and is appropriate
to cover its indemnification obligations hereunder. Each Party shall name the other as an additional insured on such Party’s
relevant insurance policies, as its interests may appear, and shall furnish to the other Party evidence of such insurance, upon
request. Additionally, at all times while this Agreement is in effect, and for such period of time thereafter as the expiration
date of the last quantities of Product delivered to King hereunder has not been reached, each Party shall procure and maintain
commercial general liability insurance (including products liability coverage) with a bodily injury, death and property damage
combined single limit of not less than USD$** per occurrence and in the aggregate.

23 

Section 7.5            Limitation on Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR ANY INDIRECT DAMAGES, WHETHER OR NOT FORESEEABLE AND EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE; EXCEPT THAT, THE FOREGOING LIMITATION OF LIABILITY SHALL NOT APPLY TO DAMAGES RESULTING FROM A PARTY’S (i) INDEMNIFICATION OBLIGATIONS HEREUNDER OR (ii) BREACH OF ITS CONFIDENTIALITY OBLIGATIONS HEREUNDER.

Section 7.6            Offset. If
any matter as to which VSI may be able to assert a claim is pending or unresolved at the time any payment is due from VSI to King under this Agreement or otherwise, VSI will be entitled to offset, deduct, counterclaim or otherwise withhold from such payment due to King any amount with respect to any pending or unresolved claims whether or not such claims arise out of or relate to this Agreement or any other matter.

ARTICLE VIII. MISCELLANEOUS

Section 8.1            Confidentiality. The Parties acknowledge that the confidentiality obligations set forth in Article 6 of the License Agreement shall apply to the activities of the Parties undertaken in connection with this Agreement.

Section 8.2            Notices. Unless otherwise provided herein, all notices or other communications which shall or may be given pursuant to this Agreement shall be in writing and shall be deemed to be effective when delivered by facsimile transmission AND (a) when delivered if sent by registered or certified mail, return receipt requested, or (b) on the next business day, if sent by internationally recognized overnight courier, in each case to the Parties at the following addresses (or at such other addresses as shall be specified by like notice) with postage or delivery charges prepaid:

	
             
 	
            If to KING PHARMACEUTICALS, INC.:
 

	
             
 	
            King Pharmaceuticals, Inc.
 

	
             
 	
            501 Fifth Street
 

Bristol, Tennessee 37620

	
             
 	
            Attention: General Counsel
 

Telephone:  423-989-8000

	
             
 	
            Facsimile:  423-990-2566
 

 

	
             
 	
            With a copy to:
 

 

With a copy to:

400 Crossing Boulevard

8th Floor

Bridgewater, New Jersey  08807

Attn:  General Counsel

Telephone:  908-429-6000

Facsimile:  908-927-8430

24 

 

	
             
 	
            If to VSI to:
 

 

Vascular Solutions, Inc.

6464 Sycamore Court

Minneapolis, Minnesota 55369

Attn:  Chief Executive Officer

Telephone:  763-656-4300

Facsimile:  763-656-4250

 

	
             
 	
            With a copy to:
 

 

Vascular Solutions, Inc.

6464 Sycamore Court

Minneapolis, Minnesota 55369

Attn:  General Counsel

Telephone:  763-656-4300

Facsimile:  763-656-4250

 

Section 8.3            Entire
Agreement. This Agreement and the Other Agreements constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior agreements or understandings of the Parties and merges all prior discussions and negotiations between them relating thereto. Neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby. To the extent that any inconsistencies exist between this Agreement and the Thrombin-JMI® Quality Agreement, this Agreement shall
control. Neither Party has relied upon any communications, representations, terms or promises, verbal or written, not set forth herein.

Section 8.4            Waiver;
Remedies. No delay on the part of VSI or King in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of either VSI or King of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

Section 8.5            Amendment. This
Agreement may not be amended, modified, altered or supplemented except by a writing signed by both Parties. No modification of any nature to this Agreement and no representation, agreement, arrangement or other communication shall be binding on the Parties unless such is expressly contained in writing and executed by the Parties as an amendment to this Agreement. This Agreement may not be amended in any respect by any purchase order, invoice, acknowledgment or other similar printed document issued by either Party.

25 

Section 8.6            No Third Party Rights. This Agreement is not intended to confer upon any non-Party rights or remedies hereunder, except as may be received or created as part of a valid assignment. 

Section 8.7            Successors
and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and
their respective successors and assigns. Except as expressly provided herein in relation to subcontracting, neither VSI nor King
may assign any of its rights, duties or obligations hereunder without the prior written consent of the other, which consent shall
not be unreasonably withheld; provided, that either Party may assign this Agreement to an Affiliate without such consent; provided
such Affiliate agrees in writing to be bound by the terms of this Agreement; and provided, further, that the assigning Party shall
not be released from its obligations hereunder. Any purported assignment without a required consent shall be void. Notwithstanding
anything to the contrary herein, each Party may assign its rights under this Agreement as security to one or more financial
institutions providing financing to the assigning Party and/or its Affiliates.

Section 8.8            Fees and Expenses. Regardless of whether or not the transactions contemplated by this Agreement are consummated, except as may be otherwise specified herein, each Party shall bear its own fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby.

Section 8.9            Governing Law; Venue. This
Agreement shall be construed under and governed in all respects by the laws of the State of New York without regard to the application of principles of conflicts of laws. The Parties agree that any dispute arising out of this Agreement shall be brought before a court of competent jurisdiction in the State of New York and each Party consents to the jurisdiction and venue of such court. 

Section 8.10            Further Assurances. Each of the Parties agrees to duly execute and deliver, or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such additional assignments, agreements, documents, and instruments, that may be necessary or as the other Party hereto may at any time and from time to time reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes of, or to better assure and confirm unto such other Party its rights and remedies under, this Agreement.

Section 8.11            Construction
and Interpretation. Unless the context of this Agreement otherwise requires: (a) words of any gender
include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively;
(c) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire
Agreement; (d) the terms “Article,” “Section,” “Exhibit” or “clause” refer to the
specified Article, Section, Exhibit or clause of this Agreement; (e) the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or”; and (f) the term “including” or
“includes” means “including without limitation” or “includes without limitation.” Whenever this
Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified. The captions of
this Agreement are for convenience of reference only and in no way define, describe, extend, or limit the scope or intent of this
Agreement or the intent of any provision contained in this Agreement. The language of this Agreement shall be deemed to be the
language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party
hereto.

26 

Section 8.12            No Joint Venture. Nothing contained herein shall be deemed to create any joint venture, agency, employer-employee or partnership between the Parties hereto, and, except as is expressly set forth herein, neither Party shall have any right by virtue of this Agreement to bind the other Party in any manner whatsoever. 

Section 8.13            Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original commercial intent of the Parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties hereto as nearly as may be possible. Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. 

Section 8.14            Force
Majeure. Neither Party shall be liable to the other Party for any failure to perform as required by this
Agreement (other than the obligation to pay money) if the failure to perform is due to circumstances reasonably beyond such
Party’s control including, without limitation, acts of God, civil disorders or commotions, acts of aggression, fire,
explosions, floods, drought, war, sabotage, terrorism, embargo, utility failures, labor disturbances, a national health emergency,
or appropriations of property, but excluding any act or decision made by a regulatory authority, (a “Force Majeure Event”). A Party whose performance is affected by a Force Majeure Event shall
immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party
giving such notice shall be excused from the performance, or the punctual performance, of such obligations, as the case may be,
from the date of such notice, up to a maximum of one hundred eighty (180) days, after which time (or such earlier time if it is
readily apparent to the Party not affected by a Force Majeure Event that such event will exceed one hundred eighty (180) days in
duration) the Party not affected, may terminate this Agreement immediately upon notice to the affected Party. To the extent
possible, each Party shall use reasonable diligent efforts to avoid or minimize the duration of any Force Majeure
Event.

Section 8.15            Independent Contractor. The Parties to this Agreement are independent contractors. Nothing contained in this Agreement shall be construed to place the Parties in the relationship of employer and employee, partners, principal and agent or a joint venture. Neither Party shall have the power to bind or obligate the other Party nor shall either Party hold itself out as having such authority. 

Section 8.16            Publicity. Except
as required by Applicable Law (including disclosure requirements of the U.S. Securities and Exchange Commission, NASDAQ or any
other stock exchange on which securities issued by a Party are traded), neither Party shall make any public announcement
concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be
unreasonably withheld, provided that it shall not be unreasonable for a Party to
withhold consent with respect to any public announcement containing any financial terms or any of such Party’s Confidential
Information. In the event of a required public announcement, to the extent practicable under the circumstances, the Party

27 

making such disclosure shall provide the other with a
copy of any such proposed disclosure prior to release and shall consider in good faith the other Party’s comments with
respect thereto. If required to file this Agreement by Applicable Laws, a Party shall consult with the other Party in advance of
such filing and shall use reasonable efforts to obtain confidential treatment of its terms, to the extent reasonably possible.
Prior to such announcement and with financial terms sufficiently in advance of the scheduled release of such announcement to
afford such other Party a reasonable opportunity to review and comment upon the proposed text. Nothing in this Section 8.16 will prohibit either Party from disclosing this Agreement or the subject matter hereof
to any potential investor, investment banker or the like for the purpose of raising financing, provided that such disclosures are subject to appropriate confidentiality provisions and limited to
use for evaluation of such financing. 

Section 8.17            Use of Name. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name, trademark or logo of the other Party for any purpose in connection with the performance of this Agreement.

Section 8.18            Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER, AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND ANY RELATED INSTRUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.18.

Section 8.19            Books and Records. Any books and records to be maintained under this Agreement by a Party shall be maintained in accordance with generally accepted accounting principles, consistently applied.

Section 8.20            Remedies. The remedies provided hereunder and under the governing law are cumulative and not exclusive. 

Section 8.21            Counterparts/Execution. This Agreement may be executed manually, electronically in Adobe® PDF file format, or by facsimile by the Parties, in any number of counterparts, each of which shall be considered one and the same agreement and shall become effective when a counterpart hereof shall have been signed by each of the Parties and delivered to the other Party. 

[The remainder of this page is left blank intentionally.]

28 

IN WITNESS WHEREOF, the
Parties have executed this Thrombin JMI® Supply Agreement as of the Effective Date.

	KING PHARMACEUTICALS, INC:  	 	VASCULAR SOLUTIONS, INC:  
	 
	By:    	    	    	By:    	    
	 
	Name:    	    	    	Name:    	    
	 
	Title:    	    	    	Title:    	    

29 

EXHIBIT A

 

Product and Specifications

 

Product

 

	
            Package

 	
            Actual Volume in Units*

 	
            Case

 	
            Batch Size*

 
	
            glass vial, labeled
10,000 units
 	
            **
 	
            **
 	
            **
 
	
            glass vial, labeled
5,000 units
 	
            **
 	
            **
 	
            **
 

 

Specifications

 

	
            10,000 unit vial
 
	
            Specification

  
 	
            Acceptable Range

  
 
	
            Thrombin Activity, U.S. (IU) Units/vial
 	
            **
 
	
            ph – Reconstituted with isotonic saline
 	
            **
 
	
            Moisture
 	
            **
 
	
            Sterility
 	
            **
 
	
            General Animal Safety per 21CFR610.11
 	
            **
 

 

	
            5,000 unit vial
 
	
            Specification

  
 	
            Acceptable Range

  
 
	
            Thrombin Activity, U.S. (IU) Units/vial
 	
            **
 
	
            ph – Reconstituted with isotonic saline
 	
            **
 
	
            Moisture
 	
            **
 
	
            Sterility
 	
            **
 
	
            General Animal Safety per 21CFR610.11
 	
            **
 

 

*Actual batch size may vary by ±** and shall be reconciled in accordance with the provisions of Section 2.2. This batch size standard will change when the filling is moved to Rochester.

 

A-1

EXHIBIT B

 

FORM OF CERTIFICATES OF ANALYSES

 

SAMPLE

 

Number:  SOP-QLA-GEN-00024-MD          SOP Version:  3.0 Department Approval/Date:     T. Duch 5/9/06    

	
            Title:  Thrombin Product Release Requirements  
 	
            QA Approval/Date:    
 	
               T. Crosby 6/12/06   
 

 

Certificate of Analysis 5,000 u/v

Thrombin, Topical (Bovine) USP

THROMBIN-JMI®

Batch/Lot Number:                 (5,000 u/v)                 

Material Number:                                 

 

Date of Manufacture: ___________

Expiration Date: ______________

 

	
            Specification

 	
            Acceptable Range

 	
            Result

 
	
            Thrombin Activity, U.S. (IU) Units/vial
 	
            **
 	
             
 
	
            ph – Reconstituted with isotonic saline
 	
            **
 	
             
 
	
            Moisture
 	
            **
 	
             
 
	
            Sterility
 	
            **
 	
             
 
	
            General Animal Safety per 21CFR610.11
 	
            **
 	
             
 

 

This lot was manufactured in compliance with cgmps following the procedures and specifications approved in U.S. License #977. The bovine plasma and lungs used to manufacture Thrombin-JMI( are taken from animals of U.S. origin. Bovine plasma and lungs used to manufacture this lot of Thrombin-JMI( do not contain, and are not derived from, specified risk material as defined in Commission Decision 97/534/EC, but are derived from inspected animals, which are fit for human consumption and meet all required USDA specifications.

______

Quality Assurance

 

Gentrac, Inc.

 

The data contained in this Certificate of Analysis is representative of the batch at the time of manufacture. Certificates of Analysis are authorized to clients on a confidential basis. No reference to the data contained in the Certificate of Analysis may be made public without our written authorization.

 

Gentrac, Inc. Is a subsidiary of JONES PHARMA INCORPORATED, Bristol, Virginia. Thrombin-JMI is a registered trademark of JONES PHARMA INCORPORATED.

 

	
            Status:  Effective  
 	
            Effective Date:  7/11/06 02:03:00  
 	
            Page 9 of 13
 

OFFICIAL COPY DO NOT DUPLICATE – CONFIDENTIAL & PROPRIETARY

 

B-1

Number:  SOP-QLA-GEN-00024-MD          SOP Version:  3.0 Department Approval/Date:     T. Duch 5/9/06    

	
            Title:  Thrombin Product Release Requirements  
 	
            QA Approval/Date:    
 	
               T. Crosby 6/12/06   
 

 

 

Certificate of Analysis 10,000 u/v

Thrombin, Topical (Bovine) USP

THROMBIN-JMI®

Batch/Lot Number:                 (10,000 u/v)                 

Material Number:                                 

 

Date of Manufacture: ___________

Expiration Date: ______________

 

	
            Specification

 	
            Acceptable Range

 	
            Result

 
	
            Thrombin Activity, U.S. (IU) Units/vial
 	
            **
 	
             
 
	
            ph – Reconstituted with isotonic saline
 	
            **
 	
             
 
	
            Moisture
 	
            **
 	
             
 
	
            Sterility
 	
            **
 	
             
 
	
            General Animal Safety per 21CFR610.11
 	
            **
 	
             
 

 

This lot was manufactured in compliance with cGMPs following the procedures and specifications approved in U.S. License #977. The bovine plasma and lungs used to manufacture Thrombin-JMI( are taken from animals of U.S. origin. Bovine plasma and lungs used to manufacture this lot of Thrombin-JMI( do not contain, and are not derived from, specified risk material as defined in Commission Decision 97/534/EC, but are derived from inspected animals, which are fit for human consumption and meet all required USDA specifications.

______

Quality Assurance

 

Gentrac, Inc.

 

The data contained in this Certificate of Analysis is representative of the batch at the time of manufacture. Certificates of Analysis are authorized to clients on a confidential basis. No reference to the data contained in the Certificate of Analysis may be made public without our written authorization.

 

Gentrac, Inc. Is a subsidiary of JONES PHARMA INCORPORATED, Bristol, Virginia. Thrombin-JMI is a registered trademark of JONES PHARMA INCORPORATED.

 

	
            Status:  Effective  
 	
            Effective Date:  7/11/06 02:03:00  
 	
            Page 10 of 13
 

OFFICIAL COPY DO NOT DUPLICATE – CONFIDENTIAL & PROPRIETARY

 

B-2

EXHIBIT C

 

VSI Device Purchase Price*

 

	
            Units
 	
            Package
 	
            Purchase Price*
per vial
 	
            Purchase Price* per vial in the event of termination having an effect set forth in Section 6.4(c)

 
 
	
            5,000
 	
            glass vial
 	
            **
 	
            **
 
	
            10,000
 	
            glass vial
 	
            **
 	
            **
 

 

*The VSI Device Purchase Price will increase annually not to exceed the PPI as set forth below..

*The VSI Device Purchase Price will increase in the event of a termination.

 

Annually during June of each calendar year during the term of this Agreement, VSI shall adjust the Purchase Price using the previous year’s PPI, whether resulting in an increase or decrease in Purchase Price undertaking such adjustment, subject to a 3% maximum annual increase for any Product.

 

 

C-1

EXHIBIT D

 

Form of Letter of Reference to Governmental Authority

 

_____________, 2007

 

U.S. Food and Drug Administration

Center for Device and Radiological Health

Document Mail Center (HFZ-401)

9200 Corporate Boulevard

Rockville, MD  20850

 

	
            RE:  
 	
            Authorization to Reference Product License 977
 

 

To Whom It May Concern:

 

Gentrac, Inc. (a wholly-owned subsidiary of King Pharmaceuticals, Inc.) Hereby gives authorization to the U.S. Food and Drug Administration to make reference to our product license 977 on behalf of:

 

Vascular Solutions, Inc.

6464 Sycamore Court

Minneapolis, MN  55369

 

In support of any device marketing applications or notifications that they may file containing Thrombin-JMI manufactured by gentrac, Inc. It is understood that gentrac manufactures the biologic product as described in our Product License and that our manufactured product will meet the specifications listed.

 

We request that all information in this file be treated as confidential, within the meaning of CFR 314.420, and that no information from the file be submitted to an applicant without our written consent to an authorized member of your department.

 

Sincerely,

GENTRAC, INC.

(a wholly owned subsidiary of King Pharmaceuticals, Inc.)

 

Greg Carrier

Sr. Director, Regulatory Affairs

 

D-1

EXHIBIT E

 

Thrombin-JMI® Quality Agreement

 

E-1

Pharmaceutical Quality Agreement

 

Between

 

KING PHARMACEUTICALS, INC.

501 Fifth Street

Bristol, Tennessee 37620

 

- hereinafter referred to as “KING” -

 

And

 

- hereinafter referred to as “ _________ “ -

 

List of Product(s): 

 

	
            -  
 	
            hereinafter referred to as “Product” -
 

 

The above Product is processed and supplied to ______ by KING as defined in  the Manufacturing and Supply Agreement, dated _______________, 2006 (or as amended and/or extended thereafter) (the “Manufacturing and Supply Agreement”).

 

Whereas the parties are aware of the fact that abidance to generally accepted pharmaceutical principles and rules (cgmp) for the manufacture, packaging, quality control, and storage/distribution of active ingredients and drug, as well as for manufacture in compliance with the product specifications are of importance;

 

Whereas the parties intend to determine their obligations and responsibilities with regard to the cooperation in manufacturing and controlling said Products as outlined in the Manufacturing and Supply Agreement, and in consideration of their mutual covenants and agreements therein and herein, and the mutual benefits to be derived therefrom, the parties, intending to be legally bound, hereby covenant.

 

E-2

Table of Contents

 

	
            Section
 	
            Title
 

 

	
            1.0
 	
            Agreement on Allocation of GMP Responsibilities
 

 

	
            2.0
 	
            Communication / Contacts
 

 

	
            3.0
 	
            Documentation and Change Control
 

 

	
            4.0
 	
            Qualification / Validation
 

 

	
            5.0
 	
            Manufacturing
 

 

	
            6.0
 	
            Labeling and Packaging Requirements
 

 

	
            7.0
 	
            Quality Assurance and Control – Sampling, In-process Testing, Batch Review, and Batch Disposition
 

 

	
            8.0
 	
            Shipping and Storage of Product
 

 

	
            9.0
 	
            Audits
 

 

	
            10.0
 	
            Post-Marketing Issues
 

 

	
            
 	
            10.1
 	
            Product Complaints
 

 

	
            
 	
            10.2
 	
            Adverse Events, Tracking and Reporting
 

 

	
            
 	
            10.3
 	
            Field Alert Reporting
 

 

	
            
 	
            10.4
 	
            Recalls
 

 

	
            
 	
            10.5
 	
            Warning Letters
 

 

	
            
 	
            10.6
 	
            Periodic Regulatory Reporting
 

 

	
            11.0
 	
            Confidentiality
 

 

	
            12.0
 	
            Dispute Resolution
 

 

	
            13.0
 	
            Terms of the Pharmaceutical Quality Agreement and Final Approval
 

 

Section 1.0

 

Agreement on Allocation of GMP Responsibilities

 

WHEREAS, the parties deem it necessary to specify the allocation of current good manufacturing practice (cgmp) responsibilities between KING and ___________ under the Manufacturing and Supply Agreement for Product manufactured by KING for _________;

 

THEREFORE, the parties hereby agree that responsibility for compliance with cgmp under the Manufacturing and Supply Agreement for such Product shall be allocated as set forth below. KING will have the responsibility for compliance allocated to it while the Product is under KING’s direct control. Compliance with applicable cgmps will become the responsibility of KING once the product is tendered for delivery to KING’s common carrier or designee by SUPPLIER, except as specifically provided below. References are to the Good Manufacturing Practice provisions set forth in 21 CFR 211, et. Seq., as amended from time to time even if the responsibilities are not included in the matrix below.

 

E-3

Part 210 –  Current Good Manufacturing Practice in Manufacturing, Processing, Packing, or Holding of Drugs ; General

 

Section 210.1 – 210.3 

Status of cGMP regulations, Applicability of cGMP regulations, Definitions

 

KING shall be responsible for compliance with these provisions.

 

Part 211 Subpart A – General Provisions

 

Section 211.1 – 211.3 

Scope, Definitions

 

KING shall be responsible for compliance with these provisions.

 

Subpart B – Organization and Personnel

 

Section 211.22 –

KING shall be responsible for compliance with this provision, except that the quality assurance unit(s) of ________ shall be responsible for the final approval or rejection of Product manufactured by KING.

 

Section 211.25 – 211.34

KING shall be responsible for compliance with these provisions.

 

Subpart C – Buildings and Facilities

 

Section 211.42 – 211.58

KING shall be responsible for compliance with these provisions, except that ______shall be responsible for the Product upon delivery to common carrier from KING, and subsequent compliance to these provisions during storage and distribution.

 

Subpart D – Equipment

 

Section 211.63 – 211.72

KING shall be responsible for compliance with these provisions for all equipment designed and qualified for use in the manufacture and packaging of the Product. 

 

Subpart E – Control of Components and Drug Product Containers and Closures

 

	
            Section 211.80 – 211.94
 	
            Not Applicable
 

 

Subpart F – Production and Process Controls

 

Section 211.100 – 211.115

KING shall be responsible for compliance with these provisions. KING shall submit written documentation to _______ Contract Quality in a timely manner for any planned changes to any manufacturing process. ________ shall review the appropriateness of the proposed change(s) and provide written approval prior to implementation by KING. ________ will determine if any regulatory submission is required under 21 CFR 314.70. See Section 3.0 of this Agreement for more information.

 

KING shall retain written records of any unplanned changes to the manufacturing process, e.g. Deviation reports. Copies of all Investigation Reports (irs) (including Manufacturing Investigation Reports (mirs), Packaging Investigation Reports (pirs), and Laboratory Investigation Reports (lirs), hereinafter collectively referred to as irs, for each batch will be sent to __________ for release purposes.

 

E-4

Subpart G – Packaging and Labeling Control

 

Section 211.122 – 211.130

KING shall be responsible for compliance with these provisions.

 

Section 211.132

Not applicable.

 

Section 211.134

KING shall be responsible for compliance with these provisions.

 

Section 211.137

KING shall be responsible for compliance with these provisions. 

 

Subpart H – Holding and Distribution

 

Section 211.142 – 211.150

KING shall be responsible for compliance with these provisions prior to delivery of the Product to a common carrier for shipment to _________. __________ shall be responsible for compliance with these provisions during shipment and after receipt of Product from KING. KING’s responsibilities for distribution shall be limited to the production and retention of shipment records of the Product to ________ or its designated recipients.

 

Subpart I – Laboratory Controls

 

	
            Section 211.160
 	
            KING shall be responsible for compliance with these provisions.
 

 

	
            Section 211.165 – 211.176
 	
            Not applicable
 

 

Subpart J – Records and Reports

 

Section 211.180 

KING shall be responsible for compliance with these provisions according to the KING corporate policy and site Standard Operating Procedure regarding record retention. 

 

	
            Section 211.182 – 211.186
 	
            Not applicable
 

 

Section 211.188 – 211.196

KING shall be responsible for compliance with these provisions.

 

Subpart K – Returned and Salvaged Drug Products

 

Section 211.204 – 211.208

Not applicable

 

Part 11 – Electronic Records : Electronic Signatures

 

Subpart A, B, and C  11.1 – 11.300

General Provisions, Electronic Records, Electronic Signatures 

 

KING shall be responsible for compliance with these provisions. 

 

E-5

Section 2.0

 

(A)  Communication

Purpose

This section details the communication channels between KING and _________ personnel for performing activities related to the approved Supply Agreement, dated _______, 2006 between the parties.

 

Communication Contacts

 

Upon reorganization or reassignment of duties, the parties agree that updates may be made to the Communication Contact table by either party with written notification, and without a formal amendment of the Agreement as otherwise required by Section 9 of the Agreement.

 

	
            AREA
 	
            King CONTACT
 	
            ____________Contact
 
	
            Main Switchboard
 	
            Bristol, Tennessee 37620

Ph: 423-989-8000
 	
             
 
	
            Contract

Administrator
 	
            Mary Flipse

Contract Administration & Attorney

400 Crossing Boulevard

Bridgewater, New Jersey

Ph:  908-429-6000

Fax: 423-990-0539
 	
             
 
	
            Plant Operations
 	
            Brad Knoll

EVP, Plant Operations

501 Fifth Street

Bristol, Tennessee  37620

Ph: 423-990-2550

Fax: 423-990-8300
 	
             
 
	
            Quality Operations

(Qualified Person Responsible for Product Release)
 	
            Rich Buecheler

EVP,  Quality

501 Fifth Street

Bristol, Tennessee  37620

Ph: 423-989-8044

Fax: 423-990-8300
 	
             
 
	
            Manufacturing Quality Assurance

(Contact for all Investigation and Deviation Reports)
 	
            Jenny Fox

Director, Contract Quality

501 Fifth Street

Bristol, Tennessee 37620

Ph: 423-274-8605

Fax: 423-989-6255
 	
             
 
	
            Regulatory Liaison
 	
            Thomas K. Rogers, III

EVP & Corporate Head, Regulatory Affairs

501 Fifth Street

Bristol, Tennessee 37620

Ph:  423-989-8172

Fax:
423-989-6133

 
 	
             
 

 

 

E-6

	
            AREA
 	
            King CONTACT
 	
            ____________Contact
 
	
            Procurement
 	
            Hugh Mitchell

Senior Director, Purchasing

501 Fifth Street

Bristol, Tennessee 37620

Ph: 423-990-2565

Fax:  423-989-6232
 	
             
 
	
            Planning
 	
            Mel Love

Senior Manager, Sourcing Materials

501 Fifth Street 

Bristol, Tennessee  37620

Phone : 423-989-8192

Fax : 423-989-6232
 	
             
 
	
            Site Operation
 	
            Jack Songster

Senior VP, Mfg Solid Dosage

501 Fifth Street

Bristol, Tennessee  37620

Ph: 423-989-7190

Fax: 423-990-0542
 	
             
 
	
            Legal Contact
 	
            Mary Flipse

Contract Administration & Attorney

400 Crossing Boulevard

Bridgewater, New Jersey

Ph:  908-429-60000

Fax: 423-990-0539
 	
             
 
	
            Change Controls
 	
            Jenny Fox

Director, Contract Quality

501 Fifth Street

Bristol, Tennessee 37620

Ph: 423-274-8605

Fax: 423-989-6255
 	
             
 

 

 

E-7

Section 3.0

 

Documentation and Change Control

 

3.1  Batch Numbering 

KING is responsible for its own batch numbering system. Batch numbers are assigned by KING standard operating procedures and are unique to a given item. Any changes to the batch numbering system(s) in use by KING will be communicated to _________’s Contract Quality Assurance representative in writing. Notification of any revisions to batch numbering standard operating procedures affecting Product made for __________ will be provided under the change control requirements below. 

 

3.2  Certificate of Analysis / Certificate of Conformance

KING shall furnish _______ with a signed Certificate of Compliance (COC) and/or Certificate of Analysis (COA) upon shipment of each batch to _________ (or its designated contractors and/or distributors). 

 

3.3  Change Control

This section defines the procedure for making changes to this agreement and to master documents (defined as those documents submitted for U.S. regulatory submission [“Master Documents”]). Master Documents include production/packaging records, product specifications and analytical test methods.

 

Change Control for the Raw Material will be administered through the designated KING’s change control system. Changes proposed by ________ will be forwarded to the Quality Assurance contact at KING’s manufacturing site. Changes proposed by KING will be forwarded in a timely manner to _______’s Contract Quality Assurance contact for approval (see Section 2.0 of this Agreement). ______ shall obtain all necessary and appropriate regulatory and quality approvals prior to authorizing any change, as required. Upon approval from ________ (and as within the ability of KING to do so), KING will initiate the changes as defined by internal KING Standard Operating Procedures for the affected site(s). All Change Control documentation will be available to ________upon request or audit. For changes proposed by ________, documentation will be provided to KING’s Change Control contact
(see Section 2).

 

	
             
 	
            NOTE:
 	
            Formatting changes, and other non-technical changes, to master records will not require prior approval by KING but a courtesy copy of such changes will be sent to KING Contract Quality Assurance. Changes to methods and/or specifications for consistency with USP or other compendia will not require prior approval by KING but a courtesy copy of such changes will be sent to KING Contract Quality Assurance. All revisions to Master Documents will be outlined in the FDA Annual Report prepared by ______(see Section 7.1 of this Agreement). 
 

 

	
             
 	
            NOTE:
 	
            _________ may utilize its own internal Change Control procedures to gain approval for any proposed change. 
 

 

Upon agreement to make changes to this Pharmaceutical Quality Agreement, the proposing party shall notify the other party in writing. No change shall be made without written agreement of both parties, except as required by law or regulatory action.

 

KING will notify ________ of any changes to any Drug Master Files (DMFs) for Active Pharmaceutical Ingredients (APIs) manufactured by KING. ________ will notify KING of any DMF changes provided to __________ by API manufacturers. 

 

3.4  Electronic Records / Signatures

KING shall comply with 21 CFR Part 11 requirements regarding the use of electronic records / signatures involved in the manufacture of the material. 

 

E-8

Section 4.0

 

Qualification / Validation 

 

4.1  Equipment Qualification  / Validation 

KING shall properly maintain and calibrate all equipment and appropriately qualify and/or validate all equipment used in the manufacturing of the material. 

 

4.2  Process Validation  

KING shall properly validate all processes involved in the manufacturing of the material for _______. 

 

4.3  Packaging Validation 

KING shall properly validate all processes involved in the packaging of the material for __________.

 

4.4  Cleaning Validation 

KING will perform cleaning validation on equipment used to manufacture the material using validated sampling and testing methods. No other products shall be allowed to utilize those product contact components affected until satisfactory cleaning validation testing results have been obtained. 

 

In the event KING wants to add new materials of a different class to the manufacturing equipment, KING will notify ________ prior to any equipment / line exposure and perform cleaning validation on all equipment. In the event cleaning validation will not begin with first exposure to the line, KING will establish worst case cleaning validation sites for sampling and testing to cGMP residual levels. KING will re-clean the equipment and test until acceptable residual levels are obtained before any subsequent Product exposure occurs. 

 

4.5  Method Validation

All methods used to test / inspect the material shall be validated according to cGMP requirements and KING’s procedures. 

 

4.6  Laboratories

Contract laboratories must be qualified by KING and approved by ________ prior to use for testing of the material for ________. 

 

E-9

Section 5.0

 

Manufacturing

 

KING shall be responsible for the manufacturing, in process controls, sampling, and release of the material in accordance with the specifications and test methods in the NDA. KING is responsible for pulling and storage of retention samples of the raw material prior to release from their facility.

 

KING shall promptly notify ________ Quality Assurance by phone and in writing of any investigations or deviations related to a batch of raw material within a reasonable timeframe of the occurrence of such investigation or deviation, not to exceed five (5) business days. KING must perform a complete investigation and submit a final approved investigation report to _______ prior to disposition of any associated batch of material and shipment.

 

In the event any batch of material supplied by KING and received by _______ fails to conform to the specifications or the quality of the batch is not acceptable, KING shall promptly and fully investigate to establish root cause(s) and corrective/preventive actions. 

 

Any protocol associated with the material must be submitted to ________ for approval and a copy of the executed protocol with all related data must be retained in the batch record. A copy of any executed protocols will be submitted to ________ at the completion of each applicable protocol and prior to lot release.

 

 

E-10

Section 6.0

 

Labeling and Packaging Requirements

 

Purpose

 

This section defines the responsibility for compliance with all labeling and packaging requirements and the responsibilities for review and approval of labeling and packaging.

 

Procedure

 

KING shall be responsible for the purchasing, sampling, inspection and testing, storage, retention samples, and release of packaging and labeling components for use in the packaging and labeling of the Product in accordance with the specifications and test methods in the Product’s application. 

 

KING shall promptly notify ____________of any deviation or investigation involving any packaging or labeling component intended for use in the packaging and labeling of the Product. KING must perform a complete investigation and submit a final approved investigation report to _________ prior to disposition of packaging and / or labeling components for use in the packaging and labeling of the Product. 

 

Any protocol associated with the packaging and labeling of the Product must be submitted to ______________ for approval and a copy of the executed protocol with all related data must be retained in the Product batch record. A copy of the executed protocol must be provided to ____________ at the completion of the protocol requirements and prior to KING lot release.

 

In cooperation with KING’s Packaging Services, _____________ will develop label art. __________ will coordinate the review and approval of new and/or revised label art.

 

NOTE:   Labeling and packaging changes may be made by either KING or __________ (see Section 3.0 of this Agreement for Change Control procedures). KING may only initiate labeling and packaging changes of a format nature; i.e., non-medical related changes. All labeling and packaging changes must be approved by ____________.

KING, with ____________’s approval, will determine label dimension specifications and other physical attributes (for Product labeled by KING only). _____________ will coordinate the conversion of KING labeling specifications to __________ labels. KING will coordinate all vendor activities and maintain adequate inventory of approved labeling as long as KING continues to supply the finished, packaged Product. ___________ shall be solely responsible for the medical content of Product labeling. ______________ shall promptly notify KING of any modification to its labeling.

 

KING will control and reconcile all labeling. Destruction of labels outside the packaging and labeling of the drug product will be performed and documented according to KING’s SOP. 

 

The expiration date is based upon the date of manufacture. The date of manufacture is designated by the date the active pharmaceutical ingredient (API) is mixed with the ________________. 

 

E-11

 

The packaging configurations for the Products are provided below. Other configurations may be added or deleted as agreed upon in writing by both parties and as approved by the necessary regulatory authority (as required). KING will ship to _______________’s designated distribution center according to KING’s Standard Operating Procedures. Such shipments shall be FOB KING’s manufacturing facility.

 

TABLE OF PRODUCTS

 

	
            Product
 	
            Product Description
 	
            Package Size(s)
 	
            NDC#
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 

 

 

E-12

Section 7.0

 

Quality Assurance and Control - Sampling, In-Process Testing, Batch Review, and Batch Disposition

 

Release Testing

 

KING shall be responsible for the manufacturing, packaging, in-process controls, sampling, inspection, and release of the material, including collection of samples for retention. 

 

KING shall promptly notify __________ Quality Assurance by phone and in writing of any investigations or deviations related to a batch of material within a reasonable timeframe of the occurrence of such investigation or deviation, not to exceed five (5) business days. KING must perform a complete investigation and submit a final approved investigation report to ________ prior to disposition of any associated batch of raw material. 

 

In the event any batch of material supplied by KING and received by ____________ fails to conform to the specifications or the quality of the batch is not acceptable, KING shall promptly and fully investigate to establish root cause(s) and corrective/preventive actions. 

 

Batch Review

 

KING shall furnish ______________ with a signed Certificate of Compliance (COC) and/or Certificate of Analysis (COA) and all investigations reports upon shipment of each batch to _____________ (or its designated contractors and/or distributors). The Certificate of Compliance (COC) and/or Certificate of Analysis (COA) shall be signed by KING’s Qualified Person or designee who is responsible for batch release of the Products and shall serve as evidence of the proper testing of the batch. 

 

Upon formal request from ________________’s Contract Administrator to the appropriate KING QA Contact, KING shall send a copy of an executed batch record. Such requests shall be fulfilled within ten(10) working days. __________ may request additional information or further investigation from KING as required for sufficient investigation.

 

Batch Disposition

 

___________ shall be responsible for the final release of the Product for distribution or rejection of the Product after receipt. It is the responsibility of KING to reject any Product deemed unacceptable prior to receipt at the ____________.

 

E-13

Section 8.0

 

Shipping and Storage of Product

 

KING will ship to ___________ (or its contractor) according to KING’s  Standard Operating Procedures. Such shipments  shall be FOB KING’s manufacturing facility. Temperature monitoring devices will be utilized on all Products produced for _______________. These devices will accompany each shipment and will be supplied by __________. Products will also be shipped on temperature controlled trucks as specified by _____________. All Product shipped from KING shall include a Certificate of Analysis /  Certificate of  Conformance which certifies that each batch has been manufactured and/or packaged in accordance with  cgmps and  applicable KING procedures. Receipt of the Certificate of Conformance / Certificate of Analysis is a requirement for formal release of the Product. The Product shall be stored in accordance with cgmps and applicable procedures and product specifications until
shipment to _________________.

 

Storage

 

KING will store the Products under conditions specified by product label requirements as supplied by ___________. KING will ensure that during storage before shipping of the Products, appropriate controls are in place to ensure that there is no interference, theft, product contamination, or mixture with any other products or materials. ___________ will provide details of any labeling requirements, container sealing and integrity, and storage and shipping conditions for the Products.

 

Packaging and Labeling for Transit

 

The Products will be labeled and packaged for transit pursuant to instructions timely provided to KING in writing by ________ and complying with cGMP and other applicable regulations (e.g., OSHA, DEA, DOT).

 

Shipment of Product to King

 

KING will ship to the designated locations. KING will not ship any product that is under quarantine unless according to controlled procedures which fully comply with regulatory requirements and which are mutually agreeable between the KING and _________. In the event that ____________ requests KING to ship product in quarantine, then __________ shall supply KING with a written certification stating, “Product will not be released to commerce until fully released.”  ________ may request shipment in quarantine for further processing, or pending adverse weather events.

 

E-14

Section 9.0

 

Audits

 

___________ shall be entitled to visit and inspect (audit) KING’s facilities that manufacture, package, and label Product for ________ on an annual basis or for cause upon reasonable notification from ____________,  These audits will also be conducted in accordance with the procedures outlined in the Manufacturing and Supply Agreement. . ____________ may inspect corresponding documents that relate to the packaging, quality control, storage, release, shipment, and complaint investigations as it relates to the Product. ____________ may also check for compliance to this Quality agreement and/or to the Supply Agreement.

 

KING shall provide ________________ with the necessary assistance and information during the audit.

 

_____________ shall supply to KING a completed audit report within thirty(30) business days of the audit.

 

KING shall formally respond to observations made by ____________ representatives on areas requiring corrective action. KING’s response will include root cause evaluation, corrective actions, preventative actions, and remedial actions, where appropriate, and shall include a timeline for completion of each action. The response will be sent to the _________ auditor within thirty (30) business days of the receipt of the audit report.

 

KING will be responsible for conducting cGMP audits of its suppliers as specified under their supplier audit program. KING will, to the extent allowed by confidentiality agreements, supply _____________ with the date of the audit and any critical observations noted applicable to the Product and the supplier’s responses upon request.

 

In the case of a request from a recognized regulatory authority having jurisdiction over the Product, KING shall permit representatives of the regulatory authority to enter KING’s premises for auditing in relation to cGMP certification. KING’s Account Management contact should notify ___________’s Quality Assurance within two(2) business day of the initiation and scope of an inspection by any recognized regulatory authority having jurisdiction over the Product, including but not limited to inspection by FDA, of KING’s site where Product is manufactured or packaged. If __________’s Product is involved with the inspection, then ___________ has the right to send a representative to the site during the inspection. _____________shall notify KING of any regulatory agency inspection specifically impacting the Products covered by this Agreement within two (2) business days
of the initiation of the audit by the regulatory agency. 

 

KING shall inform ____________’s Contract Administrator and Quality Operations on the outcome of all inspections by official authorities in areas within KING’s facilities that relate to cgmp activities that are potentially connected with the Product. If KING receives an observation related to _____________’s Product, then ___________ shall review __________’s response prior to KING’s responding to the regulatory agency. If KING received an observation related to systems that KING uses to manufacture or package __________ product, then ______________ shall receive notification of a courtesy review of the response prior to final submission to the regulatory agency. 

 

E-15

Section 10

 

Post-Marketing Issues

 

	
             
 	
            10.1  
 	
            Product Complaints
 

 

______________ will be responsible for responding to product complaints. KING will assist in evaluating such complaints with respect to Products KING manufactures and/or packages for _____________. 

 

	
             
 	
            •
 	
            Any product quality related complaints received by KING must be forwarded to __________ within  two (2) business days of receipt unless such complaint will or could cause an FDA Field Alert to be issued, in which case KING will forward such complaint to _________ within one (1) business day. 
 

 

	
             
 	
            •
 	
            ___________ will maintain a database to trend and track Product quality related complaints.
 

 

	
             
 	
            •
 	
            ______________ will forward all Product quality complaint information on Product manufactured or packaged by KING to KING’s Product Quality Assurance Department within three (3) business days of receipt at _______________.
 

 

	
             
 	
            •
 	
            When appropriate, _______________ will administer the return of the actual complaint sample to the KING for evaluation.
 

 

	
             
 	
            •
 	
            It is the responsibility of the KING’s Quality Assurance Department to evaluate the nature of the complaint (pertinent to the lot in question) and to document the evaluation on Products packaged by KING for _____________. This evaluation may include but is not limited to providing assessments of:
 

 

	
             
 	
            –
 	
            The returned sample(s) (where appropriate);
 

	
             
 	
            –
 	
            The retained samples;
 

	
             
 	
            –
 	
            The manufacturing process;
 

	
             
 	
            –
 	
            The Supplier’s required release tests;
 

	
             
 	
            –
 	
            The receiving tests for materials, components and Bulk Product capsules;
 

	
             
 	
            –
 	
            The complaint history;
 

	
             
 	
            –
 	
            Rationale for isolation/extension of the complaint beyond the event in question; and
 

	
             
 	
            –
 	
            Conclusion/Summary
 

 

	
             
 	
            •
 	
            The documented evaluation of the complaint will be provided by KING  to ______________ within thirty (30) business days from the date of receipt of the complaint.
 

 

	
             
 	
            •
 	
            It is the responsibility of __________________ to respond to the complainant about the resolution of the complaint evaluation.
 

 

	
            10.2  
 	
            Adverse Event Tracking and Reporting
 

 

Serious adverse events for the Products learned of by KING shall be submitted in writing to _______________’s Product Complaints Supervisor within two (2) business days from the date of learning thereof by KING. Non-serious adverse events for the Product learned of by KING shall be submitted in writing to _____________ no later than five (5) business days from the date of learning thereof by KING. ____________ and/or its affiliates shall have the sole responsibility for reporting and responding to such events to applicable regulatory authorities in the Territory. 

 

E-16

10.3      Field Alert Reporting

 

KING shall notify _____________ within twenty-four (24) hours if any batch of Product could be subject to a “Field Alert.”  Where a manufacturing, packaging, or testing evaluation is required for a Field Alert report, KING commits to completing the required evaluation within twenty-four (24) calendar days of ______________’s request or earlier if the situation warrants. 

 

_______________shall be the responsible party for any FDA contacts and for filing any Field Alerts. ___________________ shall send copies of any Field Alerts to KING that relate to manufacturing, packaging, or testing of the Product by KING. KING reserves the right to notify its local FDA office. 

 

	
            10.4  
 	
            Recalls
 

 

_____________ shall have the sole responsibility for deciding whether a recall is warranted and shall be responsible for communicating with FDA and for conducting any recalls of the Product. Procedures and responsibilities for Product recalls may be further outlined in the Manufacturing and Supply Agreement.

 

__________ acknowledges and understands that KING, as manufacturer of the Product, has significant regulatory obligations if there are any indications that recall or withdrawal would be necessary. Accordingly, KING and ______________ agree to cooperate fully regarding any proposed recall, product withdrawal, or field correction; and the Parties agree to keep each other advised, and to exchange copies of such documentation as may be required, to assure regulatory compliance. Either party may, in exigent circumstances, make a unilateral, final decision to notify appropriate regulatory agencies. 

 

	
            10.5  
 	
            Warning Letters
 

 

In the event KING receives an FDA Warning Letter related to _____________, KING will, within two business days of receipt, inform _________________ in writing and by telephone, providing the details associated with the cause of the warning letter.

 

In the event _____________ receives an FDA Warning Letter related to ____________, ___________ will, within two business days of receipt, inform ______________ in writing and by telephone, providing the details associated with the cause of the warning letter. 

 

	
            10.6  
 	
            Periodic Regulatory Reporting
 

 

Because ________________ owns certain regulatory applications for the Product, ______________ is responsible for providing the necessary reports including but not limited to, licenses, filings, registrations, permits, regulatory approvals, Annual Reports and adverse events.

 

KING will provide the necessary information to assist _____________ in preparation of NDA Annual Reports no later than ninety (90) days following KING’s receipt of a written request from _______________. 

 

_________________ shall insure compliance with all reporting requirements for the commercial product as the holder of the NDA. 

 

 

E-17

Section 11

 

Confidentiality

 

Purpose

This section defines the responsibilities for confidentiality of Technical Information including, but not limited to, contents of the regulatory applications, product specifications, Master Records, and test data.

 

Procedure

 

Except as otherwise provided in the Manufacturing and Supply Agreement,  KING acknowledges that the know-how with which it may be supplied pursuant to this Agreement is supplied under circumstances imparting an obligation of confidence and agrees to keep such know-how secret and confidential and to respect ____________’s proprietary rights therein and to use the same for the sole purpose of this Agreement, and during the period of this Agreement, and for a period of seven (7) years following the termination or expiration of this Agreement or as set forth in the Manufacturing and Supply Agreement, whichever is longer, not to disclose or cause or permit to be disclosed such know-how to any third party.

 

KING shall ensure that only its employees or employees of its Affiliates or consultants and contractors shall have access to know-how on a need to know basis and shall be subject to the same obligations of confidence as described above and shall enter into secrecy agreements in support of such obligations. Insofar as this is not reasonably practicable, KING shall take all reasonable steps to ensure that any such employees, consultants and contractors are made aware of such obligations, except as set forth below.

 

Both parties undertake and agree not to disclose or permit to be disclosed at any time for any reason whatsoever to any third party or otherwise make use of or permit to be made use of any trade secrets or confidential information relating to the technology, business affairs or finances of the other or of any Affiliates, suppliers, agents, distributors, licensees, licensors or other customers of the other which comes into their possession pursuant to this Agreement.

 

The obligations of confidence referred to shall not extend to any information which:

 

	
             
 	
            (i)
 	
            is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such information or its affiliates or sublicensees, as applicable;
 

 

	
             
 	
            (ii)
 	
            can be shown by written documents to have been disclosed to the receiving party or its affiliates or sublicensees by a third party, provided such information was not obtained by such third party directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement;
 

 

	
             
 	
            (iii)
 	
            prior to disclosure under this Agreement, was already in the possession of the receiving party or its affiliates or sublicensees, provided such information was not obtained directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement;
 

 

	
             
 	
            (iv)
 	
            can be shown by written documents to have been independently developed by the receiving party or its affiliates without breach of any of the provisions of this Agreement;
 

 

E-18

	
             
 	
            (v)
 	
            is disclosed by the receiving party pursuant to oral questions, interrogatories, requests for information or documents, subpoena, or a civil investigative demand of a court or governmental agency; provided, however, that the receiving party notifies the other party immediately upon receipt thereof so that the other may seek a protective order or other appropriate remedy, and provided further that the disclosing party furnishes only that portion of the information which it is advised by counsel is legally required and impose such obligations of secrecy as are possible in that regard; or
 

 

	
             
 	
            (vi)
 	
            is required to be disclosed by a party under any statutory, regulatory or similar legislative requirement or any rule of any stock exchange to which it or any affiliate is subject; provided, however, that the non-disclosing party shall be allowed to review the proposed disclosure and the disclosing party agrees to consider in good faith any proposed revisions thereof provided to the disclosing party within two (2) business days of the non-disclosing party’s receipt of the proposed disclosure and, and the parties shall seek confidential treatment for such disclosure as permitted by applicable law.
 

 

 

E-19

Section 12

 

(a)  Dispute Resolution

 

In the event that a dispute arises between KING and _______________regarding the nonconformity of a batch of the Products or regarding other matters, the senior management of the quality departments from both companies shall in good faith promptly attempt to resolve disputed issues. If the parties cannot reach agreement, the matter shall be resolved in accordance with dispute resolution provisions of the Manufacturing and Supply Agreement. Financial liability shall be determined according to the Manufacturing and Supply Agreement. 

 

E-20

Section 13

 

(b)  Terms of the Pharmaceutical Quality Agreement and Final Approval

 

Purpose

This section defines the terms of this Pharmaceutical Quality Agreement (“Agreement”) between KING and ___________________.

 

Procedure

This Agreement and its annexes and/or revisions supplement the Manufacturing and Supply Agreements and revisions or extensions specified on page 1 hereof. To the extent that any inconsistencies exist between this Agreement and said Manufacturing and Supply Agreement, the provisions in the Quality Agreement shall prevail for those issues concerning compliance concerns.

 

If any provisions of this Agreement should be or becomes invalid, the remainder of this Agreement shall remain valid and the parties shall agree on a valid provision which meets as close as possible the objectives of the invalid provision.

 

Should, due to any change of the legal situation, the basis of this Agreement be modified to such an extent that the party affected thereby cannot be reasonably expected to continue to perform under this Agreement, then the parties shall amicably try to find appropriate new rules.

 

Headings used in the Agreement are for reference purposes only and shall not be used to modify the meaning of the terms and conditions of this Agreement.

 

KING and ______________ have agreed to this Agreement as a freestanding document, and either company may propose changes to it. Any notice of this Agreement shall be made in writing to the other party in the manner and to the appropriate addresses set forth in the Manufacturing and Supply Agreement. Any amendment or supplement to this Agreement must in writing and upon mutual agreement of the parties.

 

This Agreement shall enter into force as of _______________, 2006, and shall remain valid unless this Agreement is mutually terminated and/or revised and shall continue in effect in accordance with the expiration or termination of the Manufacturing and Supply Agreement between KING and _______________.

 

In witness whereof this Agreement has been duly executed in two (2) originals.

 

	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
            KING Representative 
 	
            Date
 	
             
 	
             
 	
             
 
	
            Name:
 	
            Richard Buecheler
 	
             
 	
             
 	
             
 	
             
 
	
            Title:
 	
            Executive Vice President, Quality
 	
             
 	
             
 	
             
 	
             
 

 

 

	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
            SUPPLIER Representative 
 	
            Date
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
            Name:
 	
             
 	
             
 	
             
 	
             
 
	
            TITLE:
 	
             
 	
             
 	
             
 	
             
 

 

 

 

E-21Photowatt

 

Exhibit
4.2

SHAREHOLDER AGREEMENT

between

ATS AUTOMATION TOOLING SYSTEMS INC.

– and –

PHOTOWATT TECHNOLOGIES INC.

[     ],
2007

 

 

	 	 	 	 	 	 	 
	ARTICLE 1 INTERPRETATION	 	 	1	 
	 
	 	 	 	 	 	 
	1.1
	 	Definitions	 	 	1	 
	1.2
	 	Construction	 	 	7	 
	1.3
	 	Conflicts With Other Separation Agreements	 	 	7	 
	 
	 	 	 	 	 	 
	ARTICLE 2 GOVERNANCE	 	 	8	 
	 
	 	 	 	 	 	 
	2.1
	 	Board of Directors	 	 	8	 
	2.2
	 	Committees of the Board	 	 	9	 
	2.3
	 	Quorum	 	 	9	 
	2.4
	 	Decisions of Directors	 	 	9	 
	2.5
	 	Meetings of Shareholders	 	 	10	 
	2.6
	 	Casting Vote	 	 	10	 
	2.7
	 	Business and Affairs of Photowatt	 	 	10	 
	2.8
	 	Transactions with ATS	 	 	10	 
	2.9
	 	Certain Matters Requiring Approval of ATS	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 3 FINANCIAL REPORTING AND DISCLOSURE COVENANTS	 	 	12	 
	 
	 	 	 	 	 	 
	3.1
	 	Financial and Other Information	 	 	12	 
	3.2
	 	Auditors and Accounting	 	 	18	 
	3.3
	 	Future Financial Reporting and Disclosure	 	 	20	 
	 
	 	 	 	 	 	 
	ARTICLE 4 GENERAL PROVISIONS	 	 	21	 
	 
	 	 	 	 	 	 
	4.1
	 	Assignment	 	 	21	 
	4.2
	 	Entire Agreement	 	 	21	 
	4.3
	 	Directors and Officers’ Indemnities and Insurance	 	 	21	 
	4.4
	 	Term	 	 	22	 
	4.5
	 	Termination Not to Affect Rights or Obligations	 	 	23	 
	4.6
	 	Future Litigation and Other Proceedings	 	 	23	 
	4.7
	 	Further Assurances	 	 	23	 
	4.8
	 	Notices	 	 	23	 
	4.9
	 	Time of Essence	 	 	24	 
	4.10
	 	Governing Law	 	 	24	 
	4.11
	 	Severability	 	 	24	 
	4.12
	 	Force Majeure	 	 	25	 
	4.13
	 	Specific Performance	 	 	25	 
	4.14
	 	Currency	 	 	25	 
	4.15
	 	Time Periods	 	 	26	 
	4.16
	 	Amendment	 	 	26	 
	4.17
	 	Counterparts	 	 	26	 
	4.18
	 	Authority	 	 	26	 
	4.19
	 	Jurisdiction	 	 	26	 
	4.20
	 	Binding Effect	 	 	26	 
	4.21
	 	Expenses	 	 	27	 

 

- 2 -

	 	 	 	 	 	 	 
	4.22
	 	Waiver	 	 	27	 
	4.23
	 	Compliance With Laws	 	 	27	 

 

 

SHAREHOLDER AGREEMENT

     THIS
AGREEMENT is made as of the [     ] day of
[     ], 2007

BETWEEN:

ATS AUTOMATION TOOLING SYSTEMS INC., a corporation incorporated
under the laws of Ontario

(“ATS”)

– and –

PHOTOWATT TECHNOLOGIES INC., a corporation incorporated under
the laws of Canada

(“Photowatt”)

     WHEREAS the Parties wish to enter into this Agreement to provide for the conduct of the
business and affairs of Photowatt and to govern the relationship between Photowatt and ATS as a
shareholder of the Photowatt.

     NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this
Agreement and other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties), the parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

	1.1	 	Definitions
	 
	 	 	In this Agreement:
	 
	 	 	“Act” means the Canada Business Corporations Act, as the same may be amended from time to
time and any successor legislation thereto;

	 
	 	 	“Action” means any suit, arbitration, inquiry, proceeding or investigation by or before any
court, Governmental Authority or any arbitration tribunal asserted by a Person;

 

 

- 2 -

“Affiliate” of any specified Person means any other Person directly or indirectly
“controlling,” “controlled by” or “under common control with” (within the meaning of the
Ontario Securities Act), such specified Person; provided, however, that for
purposes of this Agreement, except to the extent expressly provided otherwise, the
determination of whether a Person is an Affiliate of another Person shall be made assuming
that no member of the ATS Group is an Affiliate of any member of the Photowatt Group and
vice versa;

“Agreement” means this agreement and all schedules, if any, attached to this agreement, in
each case as they may be supplemented or amended from time to time, and the expressions
“hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer to this
agreement, and unless otherwise indicated, references to Articles and Sections are to the
specified Articles and Sections in this agreement;

“Assets” means assets, properties and rights (including goodwill and rights arising under
Contracts), wherever located (including in the possession of vendors, other Persons or
elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each
case whether or not recorded or reflected or required to be recorded or reflected on the
books and records or financial statements of any Person;

“ATS Annual Financial Statements” means consolidated financial statements of ATS for a
fiscal year, setting forth in each case in comparative form the consolidated figures (and
notes thereto) for the previous fiscal year and all in reasonable detail and prepared in
accordance with Canadian GAAP and all applicable Laws, as well as a discussion and analysis
by management of ATS’ financial condition and results of operation for such year;

“ATS
Auditors” has the meaning ascribed thereto in Section 3.2(a);

“ATS Financial Statements” means ATS Quarterly Financial Statements and ATS Annual Financial
Statements;

“ATS Group” means ATS and each Person that ATS directly or indirectly controls (within the
meaning of the Ontario Securities Act), other than any member of the
Photowatt Group;

“ATS Public Filings” has the meaning ascribed thereto in Section 3.1(l);

“ATS Quarterly Financial Statements” means consolidated financial statements of ATS for a
fiscal quarter and the period from the beginning of the then-current fiscal year to the end
of the fiscal quarter, setting forth in each case in comparative form for each such fiscal
quarter and period of ATS, the consolidated figures (and notes thereto) for the
corresponding quarter and period of the previous fiscal year and all in reasonable detail
and prepared in accordance with Canadian GAAP and all applicable Laws, as well as a
discussion and analysis by management of ATS’ financial condition and results of operation
for such fiscal period;

 

- 3 -

“Audit Package” means all materials prepared for and deliver to Photowatt’s audit committee
relating to the approval of Photowatt Financial Statements;

“Board of Directors” or “Board” means the board of directors of Photowatt;

“Business Day” means a day other than Saturday, Sunday or other day on which commercial
banks in Toronto, Ontario are authorized or required by Law to close;

“Canadian GAAP” means those accounting principles which are recognized as being generally
accepted in Canada from time to time as set out in the Handbook published by the Canadian
Institute of Chartered Accountants, applied on a consistent basis;

“Canadian Securities Laws” means securities legislation established in each Province and
Territory of Canada, and all regulations, rules, blanket orders and policies established
thereunder or issued by Canadian Securities Regulatory Authorities;

“Canadian Securities Regulatory Authorities” means the securities regulatory authorities in
each of the Provinces and Territories of Canada;

“Common Shares” means the common shares in the capital of Photowatt at the date hereof and
includes any shares or securities into which such common shares may be converted or changed
or which result from a consolidation, subdivision, reclassification, stock split, stock
dividend, recapitalization or redesignation of the common shares of Photowatt, any shares or
securities of Photowatt which are received as a stock dividend or distribution in respect of
such common shares, any common shares of Photowatt received on the exercise of any option,
warrant or other similar right and any shares or securities which may be received by the
holders of common shares of Photowatt as a result of an amalgamation, merger, arrangement or
other reorganization of or including Photowatt;

“Consents” means the consents of Persons referred to in the disclosure letter of even date
delivered by ATS to Photowatt and initialed by the Parties;

“Contract” means any contract, agreement, lease, license, sales order, purchase order,
instrument or other commitment that is binding on any Person or any part of its property
under applicable Law;

“Convertible Security” means any security that is convertible into, exchangeable for, or
exercisable to acquire Common Shares;

“Effective Date” means the date hereof;

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended;

“Governmental Authority” means any federal, provincial, state, local or foreign government,
supranational, governmental, regulatory or administrative authority,

 

- 4 -

instrumentality, agency or commission, political subdivision, self-regulatory organization
or any court, tribunal or judicial or arbitral body or other governmental authority;

“Independent” means independent as determined pursuant to National Policy 58-201 — Corporate
Governance Guidelines of the Canadian Securities Administrators, as amended from time to
time;

“initial directors meeting” has the meaning ascribed thereto in Section 2.3;

“Law” means any law (statutory, common or otherwise), constitution, ordinance, code, rule,
regulation, guideline, executive order or other similar authority enacted, adopted,
promulgated or applied by any Governmental Authority, each as amended;

“Lease Agreement” means the Lease Agreement dated as of the date hereof between Photowatt
and ATS;

“Master Separation Agreement” means the Master Separation Agreement dated as of the date
hereof between Photowatt and ATS;

“Master Supply Agreement” means the Master Supply Agreement dated as of the date hereof
between Photowatt and ATS;

“Material Intellectual Property Assets” means intellectual property rights, including any
patents of the Photowatt Group, comprising Assets of the Photowatt Group that are material
to the Photowatt Group or the Photowatt Business;

“Meeting Schedule” means the schedule of quarterly and annual meetings of the Board and
audit committee of the Board for each of Photowatt and ATS during
calendar 2007, 2008 and 2009
which has been agreed to by both Photowatt and ATS prior to the Effective Date;

“Obligations” means all obligations, contractual or otherwise, including all liabilities and
indebtedness, whether known or unknown, asserted or unasserted, absolute or contingent,
matured or unmatured, conditional or unconditional, latent or patent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due;

“Offering” means an initial public offering by Photowatt, consummated promptly following the
execution of this Agreement;

“Ontario Securities Act” means the Securities Act (Ontario);

“OSC” means the Ontario Securities Commission;

“Parties” means ATS and Photowatt and their respective successors and permitted assigns, and
“Party” means any one of them;

 

- 5 -

“Percentage of Outstanding Common Shares” means the percentage equivalent to the quotient
obtained when (i) the number of Common Shares directly beneficially owned at the time of the
calculation by ATS and its Affiliates, is divided by (ii) the total number of Common Shares
outstanding at the time of calculation, all quantities being on a non-diluted basis;

“Person” means any individual, partnership, limited partnership, limited or unlimited
liability company, joint venture, syndicate, sole proprietorship, company or corporation
with or without share capital, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, trustee, executor, administrator or other legal personal
representative or Governmental Authority however designated or constituted;

“Photowatt Annual Financial Statements” means (i) the consolidated annual financial
statements of the Photowatt Group (and notes thereto), including in comparative form the
consolidated figures (and notes thereto) for the previous fiscal year, all in reasonable
detail and prepared in accordance with Regulation S-X, Canadian Securities Laws, Canadian
GAAP and all other applicable Laws and in accordance with any similar or successor rule or
Laws, and (ii) a discussion and analysis by management of the Photowatt Group’s financial
condition and results of operations for such year, including an explanation of any material
period-to-period change and any off-balance sheet transactions, all in reasonable detail and
prepared in accordance with Item 303(a) of Regulation S-K and Canadian Securities Laws and
in accordance with any similar or successor rule or laws;

“Photowatt Auditors” has the meaning ascribed thereto in Section 3.2(a);

“Photowatt Business” means the businesses undertaken by Photowatt, including, but not
limited to the design, manufacture and sale of photovoltaic products and related products
and services;

“Photowatt Financial Statements” means Photowatt Quarterly Financial Statements and
Photowatt Annual Financial Statements;

“Photowatt Group” means Photowatt and each Person that Photowatt directly or indirectly
controls (within the meaning of the Ontario Securities Act);

“Photowatt Public Documents” has the meaning ascribed thereto in Section 3.1(h)(i);

“Photowatt Quarterly Financial Statements” means (i) the consolidated quarterly financial
statements of the Photowatt Group (and notes thereto), including in comparative form the
consolidated figures (and notes thereto) for the corresponding quarter and periods of the
previous fiscal year, all in reasonable detail and prepared in accordance with Article 10 of
Regulation S-X, Canadian Securities Laws, Canadian GAAP and all other applicable Laws and in
accordance with any similar or successor rule or laws, and (ii) a discussion and analysis by
management of the Photowatt Group’s financial condition and results of operations for such
fiscal period, including an explanation of any

 

- 6 -

 material period-to-period change and any off-balance sheet transactions, all in reasonable
detail and prepared in accordance with Item 303(b) of Regulation S-K and Canadian Securities
Laws and in accordance with any similar or successor rule or laws;

“Prospectus” means the final prospectus filed with the SEC and deemed to be part of the
Registration Statement and filed with the Canadian Securities Regulatory Authorities
pursuant to Canadian Securities Laws;

“Registration Rights Agreement” means the Registration Rights Agreement dated as of the date
hereof between Photowatt and ATS;

“Registration Statement” means the registration statement on Form F-1 (SEC File No.
333-137044) as filed by Photowatt with the SEC in connection with the Offering, together
with all amendments and supplements thereto;

“Regulation S-K” means Regulation S-K of the General Rules and Regulations promulgated by
the SEC pursuant to the U.S. Securities Act;

“Regulation S-X” means Regulation S-X of the General Rules and Regulations promulgated by
the SEC pursuant to the U.S. Securities Act;

“Representatives” means, with respect to any Person, any of such Person’s directors,
officers, employees, consultants, advisers and agents;

“SEC” means the United States Securities and Exchange Commission or any successor agency;

“Securities Regulator” means a Canadian Securities Regulatory Authority, the SEC or any
stock exchange or quotation;

“Separation Agreements” means this Agreement, the Master Separation Agreement, the Transfer
Agreements, the Lease Agreement, the Registration Rights Agreement, the Master Supply
Agreement and the Transitional Services Agreement;

“Shareholder” means each of ATS and such other Persons as may become a holder of Common
Shares from time to time in accordance with the provisions hereof;

“Standard Financial Report” means a consolidated balance sheet, income statement and
statement of cash flows, and other management information, detailed in a form consistent
with the reporting template currently used by ATS for such financial information;

“subsequent directors meeting” has the meaning ascribed thereto in Section 2.3;

“Subsidiary” has the meaning ascribed thereto in the Ontario Securities Act;

 

- 7 -

	 	 	“Transfer” includes any sale, exchange, assignment, gift, bequest, disposition, mortgage,
charge, pledge, encumbrance, grant of security interest or other arrangement by which
possession, legal title or beneficial ownership passes from one Person to another, or to the
same Person in a different capacity, whether or not voluntary and whether or not for value,
and any agreement to effect any of the foregoing; and the words “Transferred”,
“Transferring” and similar words have corresponding meanings;
	 

	 	 	“Transfer Agreements” means the Transfer Agreements dated as of the date hereof between
Photowatt and ATS;

	 
	 	 	“Transitional Services Agreement” means the Transitional Services Agreement dated as of the
date hereof between Photowatt and ATS; and

	 
	 	 	“U.S. Securities Act” means the U.S. Securities Act of 1933, as amended.

	 
	1.2	 	Construction

     The Parties have participated jointly in the negotiation and drafting of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or
disfavouring any Party because of the authorship of any provision of this Agreement. Any reference
to any federal, state, provincial, local or foreign law shall be deemed also to refer to such law
as amended and all rules and regulations promulgated thereunder, unless the context requires
otherwise. Any reference to any Contract (including schedules, exhibits and other attachments
thereto), including this Agreement, shall be deemed also to refer to such Contract as amended,
restated or otherwise modified, unless the context requires otherwise. The words “include,”
“includes” and “including” shall be deemed to be followed by “without limitation.” Pronouns in
masculine, feminine and neuter genders shall be construed to include any other gender, and words in
the singular form shall be construed to include the plural and vice versa, unless the context
requires otherwise. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words
of similar import refer to this Agreement as a whole and not to any particular subdivision unless
expressly so limited. Where this Agreement states that a Party “will” or “shall” perform in some
manner or otherwise act or omit to act, it means that such Party is legally obligated to do so in
accordance with this Agreement. The word “or” shall not be exclusive. The captions, titles and
headings included in this Agreement are for convenience only and do not affect this Agreement’s
construction or interpretation. Any reference to an Article, Section or Schedule in this Agreement
shall refer to an Article or Section of, or Schedule to, this Agreement, unless the context
otherwise requires.

	1.3	 	Conflicts With Other Separation Agreements

     To the extent any portion of this Agreement conflicts with the Master Separation Agreement,
the Master Separation Agreement shall control.

 

- 8 -

ARTICLE 2

GOVERNANCE

	2.1	 	Board of Directors

     The Board will be comprised of three to fifteen members, initially being comprised of nine
members, not less than 25% of whom shall be “resident Canadian” as defined in the Act. ATS shall
initially elect three members of the Board.

     Following the date of this Agreement, ATS shall have the following rights of nomination:

	 	(a)	 	as long as the Percentage of Outstanding Common Shares is not less than 40%,
ATS shall have the right to nominate for election to the Board a number of directors of
the Board representing 25% of the directors of the Board rounded down to the nearest
whole number, provided that, if the Board is to consist of at least six
directors, the number of ATS nominees shall be rounded up to the nearest whole number;
and
	 
	 	(b)	 	as long as the Percentage of Outstanding Common Shares is 10% or more, but less
than 40%, ATS shall have the right to designate one nominee for election as a director
of the Board.

     Photowatt shall nominate for election to the Board the balance of the number of directors to
be elected after establishing the number of directors ATS determines to nominate in accordance with
the foregoing. Photowatt shall solicit proxies in favour of the election of ATS’ nominees and
exercise such proxies and otherwise use its commercial reasonable efforts to secure the election of
ATS’ nominees as members of the Board.

     Upon the Percentage of Outstanding Common Shares falling below 40% but not less than 10%, all
of the nominees of ATS to the Board except for one shall resign within 90 days or at such earlier
date as a meeting of the Shareholders is convened by Photowatt to elect directors. Upon the
Percentage of Outstanding Common Shares falling below 10%, the nominee of ATS to the Board shall
resign within 90 days or at such earlier date as a meeting of the Shareholders is convened by
Photowatt to elect directors.

     ATS will be entitled at any time and in its sole discretion, subject to applicable Law and
this section, by direction in writing to remove any one or more of its nominees and, so long as it
and/or its Affiliates hold the requisite Percentage of Outstanding Common Shares, nominate a
successor who will, promptly upon the resignation of the existing director, be appointed by the
Board as a director to replace the individual previously nominated. If a director nominated by ATS
ceases to be a director for any reason (other than ATS and its Affiliates ceasing to hold the
requisite Percentage of Outstanding Common Shares), ATS will nominate a successor to fill the
resulting vacancy as soon as practicable thereafter (so long as ATS and/or its Affiliates continue
to hold the requisite Percentage of Outstanding Common Shares). If ATS fails for any reason to
nominate a successor to fill a vacancy within 30 days after the vacancy arises, the Board will
appoint an individual to fill the vacancy, who shall undertake to Photowatt and ATS to serve as a

 

- 9 -

director until a successor is nominated by ATS, at which point such individual shall resign
and the nominee of ATS shall be appointed by the Board as a director.

     In the event of the proposed removal of any director nominated by ATS other than a removal
proposed by ATS in accordance with the provisions of this Agreement, Photowatt agrees to solicit
proxies against the removal of such ATS nominee and exercise such proxies and otherwise use its
commercial reasonable efforts to defeat such proposed removal.

     The provisions of this Agreement shall not limit the right attaching to the Common Shares
beneficially owned or controlled by ATS or any of its Affiliates or the exercise thereof.

	2.2	 	Committees of the Board

     The Board will have (a) an audit committee; (b) a compensation and governance committee; and
(c) such other committees, if any, as determined from time to time by the Board. Each committee
will consist of three to five members. Initially the audit committee will consist of three members
and the compensation and governance committee will consist of four members.

     Each director is entitled to receive notice of each Board committee meeting, concurrent with
that received by the members of such committees; to attend and fully participate but not to vote at
each Board committee meeting; to receive all information delivered to Board committee members,
concurrent with the delivery thereof to such members; and to receive, upon request to Photowatt,
all information to which any Board committee member, is entitled.

	2.3	 	Quorum

     A quorum for a meeting of the Board shall require:

	 	(a)	 	a majority of the number of directors, subject to the Canadian residency
requirements of the Act; and
	 
	 	(b)	 	so long as the Percentage of Outstanding Common Shares is not less than 40%, at
least one of the nominees of ATS.

     In the event that a quorum is not achieved or maintained for a meeting of the Board (an
“initial directors meeting”), any two directors may call a meeting of the Board by proper notice to
be held on a date no earlier than the fifth Business Day following the initial directors meeting
solely to address the business proposed at the initial directors meeting. A quorum for such
further meeting of the Board (a “subsequent directors meeting”) shall exclude the requirements of
Section 2.3(b) of this Agreement.

     A quorum for a meeting of any committee of the Board shall require a majority of the committee
members, subject to the Canadian residency requirements of the Act.

 

- 10 -

	2.4	 	Decisions of Directors

     In order to be effective, a decision of the Board must be approved either by a resolution
passed by the affirmative vote of a majority of the directors present and entitled to vote thereon
at a meeting of directors duly called and at which a quorum of directors are present, or by an
instrument signed by all the directors.

	2.5	 	Meetings of Shareholders

     A meeting of Shareholders shall be called by Photowatt upon written request by any two
directors of the Board within 30 days of receipt of any such request.

	2.6	 	Casting Vote

     The chair of any meeting of the Board, committee of the Board or Shareholders will not have a
casting vote.

	2.7	 	Business and Affairs of Photowatt

     Each of the Parties to this Agreement will do everything in its power to cause such meetings
to be held, votes to be cast, resolutions to be passed, by-laws to be made and confirmed, documents
to be executed and all other things and acts to be done to ensure that, at all times, to the extent
permitted by Law, the composition and operation of the Board and the operation of the business and
affairs of Photowatt comply with the terms of this Article 2 and with the entirety of this
Agreement.

	2.8	 	Transactions with ATS

     Any material commercial transaction that Photowatt proposes to enter into after the Effective
Date with ATS or any of its Affiliates that is not contemplated by the Separation Agreements must
be considered and approved by the Independent directors of Photowatt who are not nominees of ATS.

	2.9	 	Certain Matters Requiring Approval of ATS

     For so long as the Percentage of Outstanding Common Shares is not less than 50%, Photowatt
shall not, and shall not permit any member of the Photowatt Group to, without the affirmative vote
of a majority of the Board and the written consent of ATS as a Shareholder (which ATS may withhold
in its sole and absolute discretion):

	 	(a)	 	enter into any merger, amalgamation, plan of arrangement, consolidation,
business combination, joint venture or other material corporate transaction, including
the acquisition of any business or securities of any other Person (other than a
wholly-owned Subsidiary of Photowatt) or acquisition, license, lease, exchange of
Assets (other than inventory items acquired in the ordinary course of business in
connection with the Photowatt Business) or assume any Obligations of any Person, in
each case with an aggregate fair market value in excess of $50 million;

 

- 11 -

	 	(b)	 	sell, lease, exchange, license on an exclusive basis or otherwise dispose of,
whether pursuant to a single transaction or a series of transactions, Assets of the
Photowatt Group with an aggregate fair market value in excess of $50 million (other
than the sale or disposition of inventory in the ordinary course of business in
connection with the Photowatt Business) and/or any Material Intellectual Property
Assets;
	 
	 	(c)	 	adopt any plan or proposal for a complete or partial liquidation or dissolution
or any reorganization or commence any case, proceeding or action seeking relief under
any existing laws or future laws relating to bankruptcy or insolvency;
	 
	 	(d)	 	take any action that could reasonably be expected to lead to or result in a
material change in the nature of the Photowatt Business, including directly or
indirectly participate in any business other than the Photowatt Business;
	 
	 	(e)	 	other than pursuant to share compensation arrangements in respect of employees,
officers, consultants, or directors of Photowatt or any member of the Photowatt Group
approved by the Board and Shareholders, enter into any agreement or make any offer or
grant any right capable of becoming an agreement to allot or issue a number of Common
Shares or Convertible Securities where the aggregate number of Common Shares to be
issued or allotted exceeds 5% of the total number of Common Shares then outstanding on
a non-diluted basis;
	 
	 	(f)	 	take, or cause to be taken, directly or indirectly, any action (including the
making or failing to make any election under a Law) that has the effect, directly or
indirectly, of restricting or limiting the ability of ATS or any of its Affiliates to
freely Transfer Common Shares or would restrict or limit the rights of any transferee
of ATS or any of its Affiliates as a holder of Common Shares and, without limiting the
generality of the foregoing, Photowatt shall not take any action, or recommend to its
shareholders any action, which would limit the legal rights of, or deny any benefit to,
ATS or any of its Affiliates as a holder of Common Shares either (i) solely as a result
of the amount of Common Shares owned by ATS or any of its Affiliates or (ii) in a
manner not applicable to holders of Common Shares generally;
	 
	 	(g)	 	enter into a partnership or any arrangement for the sharing of profits, union
of interests, joint venture or reciprocal concession with any Person if the aggregate
fair market value of the assets contributed and liabilities assumed by the Photowatt
Group in connection therewith either exceeds on formation or at any time in the future
could reasonably be expected to exceed $50 million; or
	 
	 	(h)	 	make any commitment or agreement to do any of the foregoing.

      Each of the above matters must be presented to the Board of Directors for decision, and may
not be delegated to any committee of the Board of Directors or to the management of Photowatt or
any Subsidiary.

 

- 12 -

ARTICLE 3

FINANCIAL REPORTING AND DISCLOSURE COVENANTS

	3.1	 	Financial and Other Information

     Photowatt agrees that, for so long as ATS is required to consolidate the results of operations
and financial position of any member of the Photowatt Group (determined in accordance with Canadian
GAAP and applicable Laws, and consistent with Canadian Securities Regulatory Authorities and SEC
reporting requirements), and for a further 12 months after the date on which ATS ceases to be
required to do so:

	 	(a)	 	Financial Controls

      Photowatt shall (and shall cause each other member of the Photowatt Group to) maintain
effective disclosure controls and procedures and internal control over financial reporting
as defined in Exchange Act Rule 13a-15 promulgated under the Exchange Act and in any similar
or successor rule, and as required under Canadian Securities Laws or other applicable
securities Laws.

      Photowatt shall cause each of its principal executive and principal financial officers
to (i) sign and deliver certifications to its periodic reports and shall include the
certifications in its periodic reports, as and when required pursuant to Exchange Act Rule
13a-14 and Item 601 of Regulation S-K and in any similar or successor rule, and as required
under Canadian Securities Laws and other applicable securities Laws and (ii) sign and
deliver to ATS certification and representation documents, and orally discuss related
matters, with respect to its periodic reports, in a manner substantially similar to the
Parties’ practice in the periods prior to the Effective Date.

      Photowatt shall cause its management to evaluate its disclosure controls and procedures
and internal control over financial reporting (including any change in internal control over
financial reporting) as and when required pursuant to Exchange Act Rule 13a-15 and in any
similar or successor rule, and as required under Canadian Securities Laws and other
applicable securities Laws.

      Photowatt shall disclose in its periodic reports filed with the SEC and Canadian
Securities Regulatory Authorities information concerning its management’s responsibilities
for and evaluation of its disclosure controls and procedures and internal control over
financial reporting (including the annual management report and attestation report of its
independent auditors relating to internal control over financial reporting) as and when
required under Items 307 and 308 of Regulation S-K and other applicable SEC rules, and as
required under Canadian Securities Laws and other applicable securities Laws.

 

- 13 -

     Without limiting the general application of the foregoing, Photowatt shall (and shall
cause each other member of the Photowatt Group to) maintain internal systems and procedures
which provide reasonable assurance that (1) the Photowatt Financial Statements are reliable
and timely prepared in accordance with Canadian GAAP and applicable Law, (2) all
transactions of members of the Photowatt Group are recorded as necessary to permit the
preparation of the Photowatt Financial Statements, (3) the receipts and expenditures of
members of the Photowatt Group are authorized at the appropriate level within Photowatt, and
(4) unauthorized use or disposition of the assets of any member of the Photowatt Group that
could have material effect on the Photowatt Financial Statements is prevented or detected in
a timely manner.

	(b)	 	Fiscal Year

     Photowatt shall (and shall cause each member of the Photowatt Group to) maintain a
fiscal year that commences and ends on the same calendar days as the fiscal year of ATS
commences and ends, and to maintain monthly account periods that commence and end on the
same calendar days as the monthly account periods of ATS commence and end.

	(c)	 	Monthly Financial Reports

     No later than ten Business Days after the end of each of Photowatt’s monthly accounting
periods following the Effective Date, Photowatt shall deliver to ATS a Standard Financial
Report for Photowatt for such period and for each of its Affiliates that is included in the
consolidated Photowatt Financial Statements, as the case may be, and any adjusting journal
entries, in such format and details as ATS may reasonably request.

	(d)	 	Quarterly Financial Reports

     In connection with each meeting of the Board and audit committee of the Board indicated
on the Meeting Schedule, Photowatt will provide ATS with (i) drafts of Photowatt’s Audit
Package relating to Photowatt Quarterly Financial Statements as reasonably requested by ATS,
(ii) Photowatt’s Audit Package relating to Photowatt Quarterly Financial Statements when
such package is delivered to Photowatt’s audit committee, and (iii) the version of the
Photowatt Quarterly Financial Statements that are approved by Photowatt’s audit committee;
provided, however, that Photowatt may continue to revise such Photowatt Quarterly
Financial Statements prior to the filing thereof in order to make corrections and
non-substantive changes, which corrections and changes shall be delivered by Photowatt to
ATS as soon as practicable, and in any event within eight hours thereafter; provided
further, that ATS and Photowatt financial Representatives shall actively consult with each
other regarding any changes (whether or not substantive) that Photowatt may consider making
to Photowatt Quarterly Financial Statements and related disclosure during the two calendar
days immediately prior to any anticipated filing with the Securities Regulator, with
particular focus on any changes that would have an effect upon the financial statements or
related disclosure of ATS.

 

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     In addition to the foregoing and subject to applicable Law, no Photowatt Quarterly
Financial Statement or any other document that refers to or contains information not
previously publicly disclosed in respect of ATS, including, but not limited to the ownership
of Photowatt by ATS, the Separation Agreements, or the separation of Photowatt and ATS,
shall be filed with the Securities Regulator under applicable securities Laws or otherwise
made public by any Photowatt Group member without the prior written consent of ATS.
Notwithstanding anything to the contrary herein, Photowatt shall file Photowatt Quarterly
Financial Statements with the Securities Regulator on the same date that ATS files ATS
Quarterly Financial Statements with the Securities Regulator.

	(e)	 	Annual Financial Reports 

     In connection with each meeting of the Board and audit committee of the Board indicated
on the Meeting Schedule, Photowatt will provide ATS with (i) drafts of Photowatt’s Audit
Package relating to Photowatt Annual Financial Statements as reasonably requested by ATS,
(ii) Photowatt’s Audit Package relating to Photowatt Annual Financial Statements when such
package is delivered to Photowatt’s audit committee, and (iii) the version of the Photowatt
Annual Financial Statements that are approved by Photowatt’s audit committee;
provided, however, that Photowatt may continue to revise such Photowatt Annual
Financial Statements prior to the filing thereof in order to make corrections and
non-substantive changes, which corrections and changes shall be delivered by Photowatt to
ATS as soon as practicable, and in any event within eight hours thereafter; provided
further, that ATS and Photowatt financial Representatives shall actively consult with each
other regarding any changes (whether or not substantive) that Photowatt may consider making
to Photowatt Annual Financial Statements and related disclosure during the three calendar
days immediately prior to any anticipated filing with the Securities Regulator, with
particular focus on any changes that would have an effect upon the financial statements or
related disclosure of ATS.

     In addition to the foregoing and subject to applicable Law, no Photowatt Annual
Financial Statement or any other document that refers to or contains information not
previously publicly disclosed in respect of ATS, including, but not limited to the ownership
of Photowatt by ATS, the Separation Agreements, or the separation of Photowatt and ATS,
shall be filed with the Securities Regulator under applicable securities Laws or otherwise
made public by any Photowatt Group member without the prior written consent of ATS.
Notwithstanding anything to the contrary herein, Photowatt shall file Photowatt Annual
Financial Statements with the Securities Regulator on the same date that ATS files ATS
Annual Financial Statements with the Securities Regulator.

	(f)	 	Affiliate Financial Reports

     Photowatt shall deliver to ATS all quarterly and annual financial statements of each
Affiliate of Photowatt that is itself required to file financial statements with any
Securities Regulator under applicable securities Laws or otherwise make such financial

 

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statements publicly available, with such financial statements to be provided in the
same manner, detail and timeliness as those financial statements of Photowatt required to be
delivered to ATS pursuant to this Agreement.

	(g)	 	Conformance with ATS’ Financial Presentation

     All financial information to be provided by any Photowatt Group member to ATS pursuant
to this Agreement shall be prepared in accordance with Canadian GAAP, and where practicable,
consistent in terms of format and detail and otherwise with the policies of ATS with respect
to the application of Canadian GAAP and practices with respect to the provisions of such
financial information by such Photowatt Group member to ATS (and, where appropriate, as
presently presented in financial reports to ATS’ board of directors), with such changes
therein as may be requested by ATS from time to time consistent with changes in such
accounting policies, principles and practices; provided, however, that the Parties
acknowledge that Photowatt shall report its results in U.S. dollars and shall include in the
notes to its financial statements a reconciliation quantifying all material differences
between its financial statements as presented and its financial statements as they would be
presented if they had been prepared in accordance with United States generally accepted
accounting principles.

     All financial information to be filed with the Securities Regulator by any Photowatt
Group member shall, to the extent prepared in accordance with generally accepted accounting
principles other than Canadian GAAP, be prepared on the same basis and in the same form as
the financial information as set forth in the preceding paragraph with such modifications as
necessary to the extent of any differences between such generally accepted accounting
principles and Canadian GAAP, any such modifications to be reviewed by the Photowatt Group
member with ATS and approved by ATS not later than the required time of delivery of such
financial information to ATS in accordance with this Agreement.

	(h)	 	Photowatt Reports Generally

     Each Photowatt Group member that files information with a Securities Regulator shall
deliver to ATS:

	 	(i)	 	preliminary and substantially final drafts, as soon
as the same are prepared, of (x) all reports, notices and proxy and
information statements to be sent or made available by such Photowatt
Group member to its respective securityholders, (y) all other reports,
whether regular, periodic or otherwise, to be filed or furnished to the
Securities Regulator under applicable securities Laws ((x) and (y)
collectively, the “Photowatt Public Documents”); and
	 
	 	(ii)	 	as soon as practicable, but in no event later than
four Business Days (other than with respect to material change reports)
prior to the earliest of the dates on which the same are printed, sent or
filed, current drafts of all

 

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such Photowatt Public Documents and, with respect to material change
reports, as soon as practicable but in no event later than two Business
Days prior to the earliest of the dates on which the same are printed, sent
or filed in the case of planned material change reports and as soon as
practicable, but in no event less than four hours (or, for material change
reports to filed before noon, in no event later than 5 p.m. Toronto time on
the previous Business Day) in the case of unplanned material change
reports;

provided, however, that Photowatt may continue to revise such Photowatt Public
Documents prior to the filing thereof in order to make corrections and non-substantive
change, which corrections and changes shall be delivered by Photowatt to ATS as soon as
practicable, and in any event within eight hours thereafter; provided further, that
ATS and Photowatt financial and/or legal Representatives shall actively consult with each
other regarding changes (whether or not substantive) Photowatt may consider making to any of
its Photowatt Public Documents and related disclosures prior to any anticipated filing with
the Securities Regulator, with particular focus on any changes that would have an effect
upon the financial statements or related disclosures of ATS. In additional to the foregoing
and subject to applicable Law, no Photowatt Public Documents or any other document that
refers to or contains information not previously publicly disclosed in respect of ATS,
including, but not limited to the ownership of Photowatt by ATS, the Separation Agreements,
or the separation of Photowatt and ATS, shall be filed with the Securities Regulator or
otherwise made public by any Photowatt Group member without the prior written consent of
ATS.

	(i)	 	Budgets and Financial Projections

     Photowatt shall, as promptly as practicable, deliver to ATS copies of all annual and
monthly budgets, and two- and three-year annual budgets and financial projections
(consistent in terms of detail and as otherwise reasonably required by ATS) relating to
Photowatt on a consolidated basis and shall provide ATS an opportunity to meet with
management of Photowatt to discuss such budgets and projections.

	(j)	 	Other Information

     With reasonable promptness, Photowatt shall deliver to ATS such additional financial
and other information and data with respect to the members of the Photowatt Group and their
respective business, properties, financial positions, results of operations and prospects as
from time to time may be reasonably requested by ATS.

	(k)	 	Press Releases and Similar Information

     Photowatt shall release its annual and quarterly earnings releases on the same day or
the following day after such release is reviewed by the Board according to the Meeting
Schedule and shall give ATS the opportunity to review the information therein relating to
the Photowatt Group and to comment thereon. Photowatt and ATS shall consult each

 

- 17 -

other as to the timing of any financial guidance for a current or future period and
shall give each other the opportunity to review the information therein relating to the
Photowatt Group and to comment thereon. Photowatt shall issue its annual and quarterly
earnings releases prior to ATS issuing its respective annual and quarterly earnings
releases. No later than eight hours prior to the time and date (or, if the same will be
published before noon, no later than 5 p.m. Toronto, Ontario, time on the previous Business
Day) at which Photowatt intends to publish its regular annual or quarterly earnings release
or any financial guidance for a current or future period, Photowatt shall deliver to ATS
copies of substantially final drafts of all press releases and other statements to be made
available by any Affiliate of Photowatt to employees of any Affiliate of Photowatt or to the
public concerning any matters that could be reasonably likely to have a material financial
impact on the earnings, results of operations, financial condition or prospects of any
Photowatt Group member. In addition, prior to the issuance of any such press release or
public statement that meets the criteria set forth in the preceding sentences, Photowatt
shall consult with ATS regarding changes (other than typographical or other similar minor
changes) to such substantially final drafts. Immediately following the issuance thereof,
Photowatt shall deliver to ATS copies of final drafts of all press releases and other public
statements.

	(l)	 	Cooperation on ATS’ Filings

     Photowatt shall cooperate fully, and shall use commercially reasonable efforts to cause
Photowatt’s auditors to cooperate fully, with ATS to the extent reasonably requested by ATS
in the preparation of any filings made by ATS with a Securities Regulator pursuant to
applicable securities Laws, or otherwise made publicly available by or on behalf of ATS
(collectively, the “ATS Public Filings”).

     Photowatt shall provide to ATS all information ATS reasonably requests in connection
with any ATS Public Filings or that, in the judgment of legal advisors to ATS, is required
to be disclosed or incorporated by reference therein under applicable Law. Photowatt shall
provide such information in a timely manner on the dates requested by ATS to enable ATS to
prepare, print and release all ATS Public Filings on dates as ATS shall determine but in no
event later than is required by applicable Law. Photowatt shall use commercially reasonable
efforts to cause its auditors to consent to any reference to them as experts in any ATS
Public Filings if required under applicable Law.

     If and to the extent requested by ATS, Photowatt shall diligently and promptly review
all drafts of such ATS Public Filings and prepare in a diligent and timely fashion any
portion of such ATS Public Filings pertaining to Photowatt.

     Prior to any printing or public release of any ATS Public Filings, an appropriate
executive officer of Photowatt shall, if requested by ATS, certify that the information
relating to any Photowatt Group member or the Photowatt Business in such ATS Public Filings
is accurate, true, complete and correct in all material respects.

 

- 18 -

     Unless required by Law, Photowatt shall not publicly release any financial or other
information that conflicts with the information with respect to any Photowatt Group member
or the Photowatt Business that is included in any ATS Public Filings without ATS’ prior
written consent. Prior to the release or filing thereof, ATS shall provide Photowatt with a
draft portion of any ATS Public Filing containing information relating to the Photowatt
Group and shall give Photowatt an opportunity to review such information and comment
thereon; provided, however, that ATS shall determine in its sole and absolute
discretion the final form and content of all ATS Public Filings.

	3.2	 	Auditors and Accounting

     Photowatt agrees that, for so long as ATS is required to consolidate the results of operations
and financial position of any member of the Photowatt Group (determined in accordance with Canadian
GAAP and applicable Laws, and consistent with Canadian Securities Regulatory Authorities and SEC
reporting requirements), and for a further 12 months after the date on which ATS ceases to be
required to do so:

	 	(a)	 	Audit Timing

     Photowatt
shall use commercially reasonable efforts to enable its (and its
Affiliates’) independent auditors (the “Photowatt
Auditors”) to
complete their audit such that they may date their opinion on Photowatt Annual Financial
Statements on the same date that ATS’ independent auditors (the “ATS Auditors”) date their
opinion on ATS Annual Financial Statements, and to enable ATS to meet its timetable for the
printing, filing and public dissemination of ATS Annual Financial Statements, all in
accordance with this Agreement and as required by applicable Law. Photowatt shall request
that the Photowatt Auditors date their opinion on Photowatt Annual Financial Statements on
the same date that the ATS Auditors date their opinion on ATS Annual Financial Statements.

	 	(b)	 	Information Needed by ATS

     Photowatt shall provide to ATS on a timely basis all information ATS reasonably
requires to meet its schedule for the preparation, printing, filing and public dissemination
of ATS Annual Financial Statements in accordance with this Agreement and as required by
applicable Law. Without limiting the generality of the foregoing, Photowatt shall provide
all required financial information with respect to the Photowatt Group to the Photowatt
Auditors in a sufficient and reasonable time and in sufficient detail to permit

 

- 19 -

the Photowatt Auditors to take all steps and perform all reviews necessary to provide
sufficient assistance to the ATS Auditors with respect to information to be included or
contained in ATS Annual Financial Statements.

	(c)	 	Access to Photowatt Auditors

     Photowatt shall authorize the Photowatt Auditors to make available to the ATS Auditors
both the personnel who performed, or are performing, the annual audit of Photowatt and work
papers related to the annual audit of Photowatt, in all cases within a reasonable time prior
to the opinion date for the Photowatt Auditors, so that the ATS Auditors are able to perform
the procedures they consider necessary to take responsibility for the work of the Photowatt
Auditors as it relates to the report of the ATS Auditors on ATS Financial Statements, all
within sufficient time to enable ATS to meet the timetable for the printing, filing and
public dissemination of ATS Annual Financial Statements.

	(d)	 	Access to Records

     If ATS determines in good faith that there may be an inaccuracy in a Photowatt Group
member’s financial statements or deficiency in a Photowatt Group member’s internal
accounting controls or operation that could materially impact ATS Financial Statements, at
the request of ATS, Photowatt shall provide to ATS’ internal auditors access to the
Photowatt Group member’s books and records so that ATS may conduct reasonable audits
relating to the financial statements provided by Photowatt under this Agreement as well as
to the internal accounting controls and operations of the Photowatt Group.

	(e)	 	Notice of Changes

     Subject to sections above under the heading “Auditors and Accounting”, Photowatt shall
give ATS as much prior notice as reasonably practicable of any proposed determination of, or
significant changes in, Photowatt’s accounting estimates or accounting principles, policies
or practices from those in effect on the date of the audited financial statements included
in the Prospectus. Photowatt shall consult with ATS and, if requested by ATS, Photowatt
(and the Photowatt Auditors, if requested) shall consult with the ATS Auditors with respect
to any such proposed determination or change. Unless otherwise required by applicable Law,
Photowatt shall not make any such determination or changes without prior written consent of
ATS if such determination or change would be sufficiently material to be required to be
disclosed in financial statements or other disclosure documents filed by Photowatt or ATS
with a Securities Regulator.

	(f)	 	Accounting Changes Requested by ATS

     Notwithstanding the section entitled “Notice of Changes” above, unless
prohibited by applicable Law, Photowatt shall make any changes in its accounting

 

- 20 -

estimates or accounting policies or practices that are practicable in order for
Photowatt’s accounting policies or practices to be consistent with those of ATS.

	 	(g)	 	Special Reports of Deficiencies or Violations

     Photowatt shall report in reasonable detail to ATS any of the following events or
circumstances promptly after any executive officer of Photowatt or any member of the Board
of Directors becomes aware of such matter:

	 	(i)	 	any significant deficiency or material weakness in
the design or operation of internal control over financial reporting that
is reasonably likely to adversely affect Photowatt’s ability to record,
process, summarize and report financial information;
	 
	 	(ii)	 	any fraud, whether or not material, that involves
management or other employees who have a significant role in the internal
control over financial reporting to Photowatt;
	 
	 	(iii)	 	any illegal act within the meaning of Section 10A(b)
and (f) of the Exchange Act; and
	 
	 	(iv)	 	any report of a material violation of Law that an
attorney representing any Photowatt Group member has formally made to any
officers or directors of Photowatt pursuant to the SEC’s attorney conduct
rules (17 C.F.R. Part 205).

	3.3	 	Future Financial Reporting and Disclosure

     Subject to Sections 3.1 and 3.2, Photowatt agrees that for so long as ATS is required to
account for its investment in Photowatt under the equity method of accounting (determined in
accordance with Canadian GAAP and applicable Laws, and consistent with Canadian Securities
Regulatory Authorities and SEC reporting requirements), Photowatt shall provide ATS, in a timely
fashion and in any event in sufficient time to allow ATS to meet its financial and legal
obligations (including, but not limited to, any obligations relating to disclosure control or
internal control over financial reporting that ATS deems necessary), with financial and other
information and data with respect to the members of the Photowatt Group and their respective
business, properties, financial positions, results of operations and prospects, and otherwise
comply with the requirements of Section 3.1(a) through
(l) and Section 3.2(a) through (g) to the
extent reasonably requested by ATS, having regard to ATS’ financial and legal obligations, the
minimization of efforts by ATS that are duplicative with those of Photowatt’s and resulting
additional expense to ATS in fulfilling those obligations, and any other considerations relevant in
the circumstances.

 

- 21 -

ARTICLE 4

GENERAL PROVISIONS

	4.1	 	Assignment

     Neither Party shall assign, transfer or otherwise alienate any or all of its rights or
interest under this Agreement without the express prior written consent of the other Party, which
in the case of the consent of ATS, may be granted or withheld in ATS’ sole discretion, and in the
case of the consent of Photowatt, shall not be unreasonably withheld or delayed unless the proposed
assignee is a Person that is directly or indirectly engaged in any development, production,
manufacture, marketing, distribution, promotion or sale of products competitive with the products
of the Photowatt Group in any country in the world in which any member of the Photowatt Group
conducts its business and the sale of such competitive products exceeds 20% of Photowatt’s
consolidated revenues in its most recently completed financial year preceding the proposed date of
assignment, transfer or alienation, as the case may be, in which case the consent of Photowatt may
be granted or withheld in Photowatt’s sole discretion; provided, however, ATS may
assign any or all of its rights or interest under this Agreement to any Affiliate of ATS without
the consent of Photowatt. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and thereto, respectively, and their respective successors and permitted assigns,
and any permitted assignee shall agree to perform the obligations of the assignor of this
Agreement. In the event that the rights of ATS referred to under Section 2.9 are
transferred, assigned or alienated to a non-ATS affiliate, such rights shall expire on the 90th day following
the date of such transfer, assignment or alienation. Any attempted transfer, assignment or
alienation in violation of this Section 4.1 shall be invalid and ineffective ab initio.

	4.2	 	Entire Agreement

     This Agreement and the other Separation Agreements constitute the entire agreement between the
Parties with respect to the subject matter hereof and thereof and supersede (a) all prior oral or
written proposals or agreements, (b) all contemporaneous oral proposals or agreements and (c) all
previous negotiations and all other communications or understandings between the Parties, in each
case with respect to the subject matter hereof and thereof. No reliance is placed on any warranty,
representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or
after entering into this Agreement, or any amendment or supplement thereto, by any Party to this
Agreement or its directors, officers and agents, to any other Party to this Agreement or its
directors, officers and agents except to the extent that the same has been reduced to writing and
included as a term of the Separation Agreements, and none of the Parties to this Agreement has been
induced to enter into this Agreement or any amendment or supplement by reason of any such warranty,
representation, opinion, advice or assertion of fact. Accordingly, there will be no liability,
either in tort (including negligence) or in Contract, assessed in relation to any such warranty,
representation, opinion, advice or assertion of fact, except to the extent contemplated above.

 

- 22 -

	4.3	 	Directors and Officers’ Indemnities and Insurance

     To the fullest extent permitted by law, Photowatt will indemnify all directors, officers,
former directors and former officers of Photowatt, ATS (to the extent that ATS exercises the
rights, powers, duties and liabilities of directors of Photowatt), and their heirs and legal
representatives, against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by the individual in respect of any civil,
criminal, administrative, investigative or other proceeding in which the individual is involved
because of that association with Photowatt, if such individual

	 	(a)	 	acted honestly and in good faith with a view to the best interests of
Photowatt; and
	 
	 	(b)	 	in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, the individual had reasonable grounds for believing
that the individual’s conduct was lawful.

     Photowatt will advance moneys to an individual referred to in this Section 4.3 for the
costs, charges and expenses of a proceeding referred to in this Section 4.3. The individual
will repay the moneys if the individual does not fulfil the conditions of this Section 4.3.

     The intention of this Section 4.3 is that all persons referred to in this Section
4.3 will have all benefits provided under the indemnification provisions of the Act to the
fullest extent permitted by law, and Photowatt will forthwith pass all resolutions and take such
other steps as may be required to give full effect to this Section 4.3.

     For a period of seven years from the date ATS ceases to have the right to nominate any member
of the Board, this Agreement and the articles and by-laws of Photowatt (and its successors) will
not be modified or amended to diminish any current or past nominee’s right to indemnification and
exculpation as is currently provided. Furthermore, so long as ATS is entitled to nominate a member
of the Board and thereafter so long as any past or present ATS nominee may be subject to any
possible civil, criminal, administrative, investigative or other action or proceeding to which he
or she would be made a party by reason of being a director of Photowatt, Photowatt will use
commercially reasonable efforts to maintain in full force and effect, for directors and officers of
Photowatt, one or more policies of directors and officers’ insurance issued by a reputable insurer
or insurers having a policy limits and a retention equal to or better than the amounts of
Photowatt’s policy now in force (to the extent commercially available and at rates not
substantially in excess of current rates). Furthermore, Photowatt agrees that each ATS nominee
will be covered under such insurance policy in a manner as to provide him or her with the same
rights and benefits as are accorded Photowatt’s directors most favourably insured by the policy.

	4.4	 	Term

     This Agreement will continue in force until the earlier of:

	 	(a)	 	the date on which this Agreement is terminated by the written agreement of the
Parties; and

 

- 23 -

     (b) such time as the Percentage of Outstanding Common Shares is less than 10%.

	4.5	 	Termination Not to Affect Rights or Obligations

     Termination of this Agreement will not affect or prejudice any rights or obligations which
have accrued or arisen under this Agreement prior to the time of termination and such rights and
obligations, including any indemnities, will survive the termination of this Agreement. For
greater certainty, no termination of this Agreement will affect the rights of any Person under
Section 4.3.

	4.6	 	Future Litigation and Other Proceedings

     If any member of the Photowatt Group (or any of its Representatives) or any member of the ATS
Group (or any of its Representatives) at any time after the Effective Date initiates or becomes
subject to any Action with respect to which the Parties have no prior agreements (as to
indemnification or otherwise), upon reasonable notice (a) the Party (and its Group members and its
and their respective Representatives) that has not initiated and is not subject to such Action
shall comply, at the other Party’s expense, with any reasonable requests by the other Party for
assistance in connection with such Action (including by way of provision of information and making
available of Representatives as witnesses) and (b) each Party (and its Representatives) shall, at
its own expense, coordinate with the other Party its strategies and actions with respect to such
Action to the extent such coordination would not be detrimental to its interests and shall comply,
at the expense of the requesting Party, with any reasonable requests of the other Party for
assistance in connection therewith (including by way of provision of information and making
available of Representatives as witnesses).

	4.7	 	Further Assurances

     On and after the Effective Date, each Party hereto shall cooperate with the other Party, and
without any further consideration, but at the expense of the requesting Party, to execute and
deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all
instruments, including instruments of conveyance, assignment and transfer, and to make all filings
with, and to obtain all consents of, any Governmental Authority or any other Person under any
permit, license, agreement, indenture or other instrument (including any Consents or consents,
approvals, rulings or decisions of any Governmental Authority), and to take all such other actions
as such Party may reasonably be requested to take by any other Party hereto from time to time,
consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of
this Agreement and the other transactions contemplated hereby.

	4.8	 	Notices

     Any notice, instruction, direction, demand or other communication to any Party under the terms
of this Agreement shall be in writing and shall be deemed properly delivered, given and received:
(a) when delivered by hand; (b) on the day sent by facsimile provided that the sender has received
confirmation of transmission from the recipient as at or prior to 5:00 p.m. Toronto time on such
day; (c) the first Business Day after sent by facsimile (to the extent that the sender

 

- 24 -

has received confirmation of transmission from the recipient after 5:00 p.m. Toronto time on the
day sent by facsimile); or (d) the next business day after sent by registered mail (at any time
other than during a general discontinuance of postal service due to strike, lockout or otherwise)
or by courier or express delivery service, in any case to the address or facsimile telephone number
set forth beneath the name of such Party below (or to such other address or facsimile telephone
number as such Party shall have specified in a written notice given to the other Parties hereto):

	 	(a)	 	if to ATS, to:

ATS Automation Tooling Systems Inc.

250 Royal Oak Road

Cambridge, Ontario N3H 4R6

Attention:     General Counsel

Fax No.:       (519) 650-6520

	 	(b)	 	if to Photowatt, to:

Photowatt Technologies, Inc.

25 Reuter Drive

Cambridge, Ontario N3E 1A9

Attention:     President and Chief Executive Officer

Fax No.:       (519) 650-6535

     In the event of a general discontinuance of registered mail service due to strike, lock out or
otherwise, any notice, instruction, direction, demand or other communication will be delivered by
hand, courier or express delivery service or sent by facsimile and will be deemed to have been
received in accordance with this Section.

	4.9	 	Time of Essence

     Time is of the essence of this Agreement.

	4.10	 	Governing Law

     This Agreement shall be construed in accordance with and governed by the laws of the Province
of Ontario and the federal laws of Canada applicable therein.

	4.11	 	Severability

     If any term or other provision of this Agreement shall be determined by a court,
administrative agency or arbitrator in any jurisdiction to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not render the entire Agreement invalid and
shall not affect the validity, legality or enforceability of such term or other provision in any
other

 

- 25 -

jurisdiction. Rather, this Agreement shall be construed as if not containing the particular
invalid, illegal or unenforceable provision, and all other provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to either Party.
Upon such determination that any term or other provision is invalid, illegal or unenforceable, the
Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the Parties as closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent permitted under applicable Law.

	4.12	 	Force Majeure

     No Party shall be deemed in default of this Agreement to the extent that any delay or failure
in the performance of its obligations under this Agreement results from any cause beyond its
reasonable control, such as acts of God, decrees or restraints of any Governmental Authority, acts
of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, unusually severe weather conditions, strikes or other labour disturbances or
unavailability of parts, or, in the case of computer systems, any failure in electrical or air
conditioning equipment, and any other cause or causes whether similar or dissimilar to those
already specified, which cannot be controlled by such Party. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time lost by reason of
the delay; provided however that the Party seeking to excuse its performance shall promptly notify
the other Party of the cause therefor, such performance shall be so excused during the inability of
the Party to perform so caused, but for no longer period, and the cause thereof shall be remedied
as far as is commercially reasonable with all reasonable dispatch.

	4.13	 	Specific Performance

     In the event of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby
aggrieved shall have the right to specific performance and injunctive or other equitable relief of
its rights under this Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies
at law for any breach or threatened breach, including monetary damages, are inadequate compensation
for any loss and that any defense in any action for specific performance that a remedy at law would
be adequate is waived. Any requirements for security or posting of any bond with such remedy are
waived.

	4.14	 	Currency

     Except as expressly provided in this Agreement, all amounts in this Agreement are stated and
will be paid in Canadian currency.

 

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	4.15	 	Time Periods

     Unless otherwise specified, time periods within or following which any payment is to be made
or act is to be done shall be calculated by excluding the day on which the period commences and
including the day on which the period ends.

	4.16	 	Amendment

     This Agreement may only be modified, amended by, altered or supplemented by the execution and
delivery of a written agreement executed by both the Parties.

	4.17	 	Counterparts

     This Agreement may be executed in separate counterparts, each of which shall be deemed an
original and all of which, when taken together, shall constitute one and the same agreement.

	4.18	 	Authority

     Each Party represents to the other Party that (a) it has the corporate power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this
Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has
duly and validly executed and delivered this Agreement and (d) this Agreement is legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’
rights generally and general equitable principles.

	4.19	 	Jurisdiction

     If any Dispute arises out of or in connection with this Agreement, except as expressly
contemplated by another provision of this Agreement, the Parties irrevocably (and the Parties shall
cause each other member of their respective Group to irrevocably) (a) consent and submit to the
exclusive jurisdiction of the Courts of the Province of Ontario, (b) waive any objection to that
choice of forum based on venue or to the effect that the forum is not convenient, and (c) WAIVE TO
THE FULLEST EXTENT PERMITTED BY LAW ANY AND ALL RIGHT TO TRIAL OR ADJUDICATION BY JURY.

	4.20	 	Binding Effect

     This Agreement binds and benefits the Parties and their respective successors and permitted
assigns. This Agreement is for the sole benefit of the Parties (and, solely for purposes of
Section 4.3, the Persons indemnified thereby) and nothing in this Agreement, express or
implied, confers or intends to confer any rights or remedies of any nature whatsoever in favour of
any Person (including any employee or shareholder of ATS or Photowatt) other than the Parties.

 

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	4.21	 	Expenses

     Except as otherwise provided in this Agreement, each Party shall be responsible for its own
fees, costs and expenses incurred in connection with the matters contemplated by this Agreement.

	4.22	 	Waiver

     A provision of this Agreement may be waived only by a writing signed by the Party or Parties
intended to be bound by the waiver. A Party is not prevented from enforcing any right, remedy or
condition in the Party’s favour because of any failure or delay in exercising any right or remedy
or in requiring satisfaction of any condition, except to the extent that the Party specifically
waives the same in writing. No waiver of any provision of this Agreement shall constitute a waiver
of any other provision nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided. Any enumeration of a Party’s rights and remedies in this Agreement is not
intended to be exclusive, and a Party’s rights and remedies are intended to be cumulative to the
extent permitted by Law and include any rights and remedies authorized in Law or in equity.

	4.23	 	Compliance With Laws

     Each Party shall comply with all applicable legal requirements (including all relevant
federal, state and provincial legislation and regulatory requirements); and without limiting the
generality of the foregoing, each Party shall comply with, and shall take all necessary measures to
ensure that (i) its actions (or lack of action) do not result in non-compliance by the other Party,
with the provisions of the Personal Information Protection and Electronic Documents Act (Canada)
and any similar federal, state or provincial legislation, including the provisions relating to the
collection, use, retention and disclosure of Personal Information and (ii) the transfer of any
information hereunder is in compliance with applicable export control or similar Laws.

[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]

 

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     IN WITNESS WHEREOF, the parties have executed this Agreement.

	 	 	 	 	 	 	 
	 	 	ATS AUTOMATION TOOLING SYSTEMS INC.
	 
	 	 	 	 	 	 
	 

	 	Per:	 	 	 	 
	 

	 	 	 	 
	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:	 	 	 	 
	 

	 	 	 	 
	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PHOTOWATT TECHNOLOGIES INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:	 	 	 	 
	 

	 	 	 	 
	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]