Manufacturing Service Agreement

Exhibit 10.1

January 9, 2007BIS

Manufacturing Services Agreement relating to rhThrombin

Between

Patheon Italia S.p.A.

- and -

ZymoGenetics, Inc.

Effective: 1 January 2006 Signed: 19 January 2007

" [ * ]" = omitted, confidential material, which material has been separately filed with the Securities and Exchange Commission pursuant to a request for confidential treatment.


Table of Contents

ARTICLE 1 - INTERPRETATION 1

1.1 DEFINITIONS. 1

1.2 CURRENCY. 5

1.3 SECTIONS AND HEADINGS. 5

1.4 SINGULAR TERMS. 6

1.5 SCHEDULES. 6

ARTICLE 2 - PATHEON' S OBLIGATIONS 6

2.1 TECHNICAL TRANSFER ACTIVITIES AND DEDICATED EQUIPMENT. 6

2.2 MANUFACTURING SERVICES. 8

2.3 TARGET YIELD. 9

2.4 MANUFACTURING REQUIREMENTS. 10

ARTICLE 3 - CLIENT' S OBLIGATIONS 11

3.1 PAYMENT. 11

3.2 ACTIVE PHARMACEUTICAL INGREDIENT. 11

ARTICLE 4 - CONVERSION FEES AND COMPONENT COSTS 11

4.1 FEES AND COMPONENT COSTS. 11

4.2 VALUE ADDED TAX. 12

4.3 ADJUSTMENTS TO PRICING. 12

ARTICLE 5 - ORDERS, DELIVERY, INVOICING, PAYMENT, PRODUCT DEFICIENCIES 14

5.1 BINDING YEARLY FORECAST. 14

5.2 ROLLING FORECAST AND FIRM ORDERS. 17

5.3 RELIANCE BY PATHEON. 18

5.4 STANDARD MINIMUM BATCH SIZE AND MINIMUM ORDER QUANTITIES. 19

5.5 SHIPMENTS. 19

5.6 INVOICES AND PAYMENT. 19

5.7 MONTHLY REPORTS. 19

ARTICLE 6 - RELEASE OF PRODUCT; SAFETY REPORTING AND RECALLS 20

6.1 RELEASE OF PRODUCT. 20

6.2 ACCEPTANCE OF RELEASED PRODUCT. 20

6.3 DETERMINATION OF DEFICIENCY AND REJECTION. 21

6.4 NOTICE OF SAFETY RELATED INFORMATION; AND COORDINATED RESPONSE 22

6.5 PRODUCT RECALLS AND RETURNS. 22

6.6 CUSTOMER QUESTIONS AND COMPLAINTS. 23

6.7 SOLE REMEDY. 24

ARTICLE 7 - CO-OPERATION 24

7.1 RELATIONSHIP MANAGERS AND PERSON-IN-PLANT. 24


- i -

7.2 GOVERNMENTAL AGENCIES. 26 7.3 RECORDS AND ACCOUNTING BY PATHEON. 26 7.4 INSPECTION. 26 7.5 REPORTS. 27 7.6 REGULATORY AUTHORITIES FILINGS. 27 ARTICLE 8 - TERM AND TERMINATION 28 8.1 TERM. 28 8.2 TERMINATION FOR CAUSE. 29 8.3 PRODUCT DISCONTINUATION. 30 8.4 CONSEQUENCES OF TERMINATION. 30 ARTICLE 9 - REPRESENTATIONS, WARRANTIES AND COVENANTS 32 9.1 AUTHORITY. 32 9.2 INTELLECTUAL PROPERTY RIGHTS. 32 9.3 DEBARRMENT. 32 9.4 QUALITY AND COMPLIANCE. 32 9.5 PERMITS. 33 9.6 COMPLIANCE WITH LAWS. 33 9.7 WARRANTY DISCLAIMER. 34 ARTICLE 10 - REMEDIES AND INDEMNITIES 34 10.1 CONSEQUENTIAL DAMAGES. 34 10.2 LIMITATION OF LIABILITY. 34 10.3 PATHEON. 35 10.4 CLIENT. 36 10.5 REASONABLE ALLOCATION OF RISK. 36 ARTICLE 11 - CONFIDENTIALITY 37 11.1 DISCLOSURE. 37 11.2 USE OF INFORMATION. 37 11.3 EXCEPTIONS. 37 11.4 PERMITTED DISCLOSURES. 37 ARTICLE 12 - DISPUTE RESOLUTION 38 12.1 AMICABLE SETTLEMENT. 38 12.2 GOVERNING LAW AND JURISDICTION. 39 ARTICLE 13 - MISCELLANEOUS 39 13.1 INVENTIONS. 39 13.2 INTELLECTUAL PROPERTY. 40 13.3 INSURANCE. 40 13.4 INDEPENDENCE CONTRACTORS. 41 13.5 NO WAIVER. 41


- ii -

13.6 ASSIGNMENT AND SUBCONTRACT 41 13.7 FORCE MAJEURE. 41 13.8 NOTICES. 42 13.9 SEVERABILITY. 43 13.10 ENTIRE AGREEMENT. 43 13.11 OTHER TERMS. 43 13.12 NO THIRD PARTY BENEFIT OR RIGHT. 43 13.13 EXECUTION IN COUNTERPARTS. 44 13.14 TIME OF ESSENCE. 44 SCHEDULE A - QUALITY AGREEMENT SCHEDULE B - PRODUCT SPECIFICATIONS, ETC. APPENDIX 1 TO SCHEDULE B - PRODUCT SPECIFICATIONS APPENDIX 2 TO SCHEDULE B - MANUFACTURING DESCRIPTION APPENDIX 3 TO SCHEDULE B - COMPONENT SPECIFICATIONS, API AND RAW MATERIALS APPENDIX 4 TO SCHEDULE B - MANUFACTURING RECORD SIGNATURE PAGE APPENDIX 5 TO SCHEDULE B - LOT NUMBERING, EXPIRATION DATE APPENDIX 6 TO SCHEDULE B - QUALITY CONTROL SPECIFICATIONS AND QUALITY CONTROL DOCUMENTATION SCHEDULE C - MINIMUM RUN QUANTITY AND UNIT PRICES SCHEDULE D - API AND AGREED VALUE OF API SCHEDULE E - SCHEDULE F - DEDICATED EQUIPMENT SCHEDULE G - ROLLING FORECAST EXAMPLE


- iii -

January 9, 2007BIS

MANUFACTURING SERVICES AGREEMENT RELATING TO rhTHROMBIN THIS MANUFACTURING SERVICES AGREEMENT RELATING TO rhTHROMBIN ( this " Agreement" ) effective as of the 1st day of January 2006,

B E T W E E N:

PATHEON ITALIA S.P.A.,

a corporation existing under the laws of Italy, (hereinafter referred to as " Patheon" ),

- and -

ZYMOGENETICS, INC., a corporation existing under the laws of the State of Washington, U.S.A.,

(hereinafter referred to as the " Client" ).

THIS AGREEMENT WITNESSES THAT in consideration of the rights conferred and the obligations assumed herein, and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each Party), and intending to be legally bound the Parties agree as follows:

ARTICLE 1 -

INTERPRETATION

1.1 Definitions .

The following terms shall, unless the context otherwise requires, have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

" Active Pharmaceutical Ingredient" or " API" means the material listed on Schedule D hereto.

" API Value" means the cost of the Active Pharmaceutical Ingredient set out in Schedule D hereto.

" Affiliate" means:

(a) a business entity which owns, directly or indirectly, a controlling interest in a Party to this Agreement, by stock ownership or otherwise; or

[ * ] Confidential Treatment Requested

(b) a business entity which is owned by a Party to this Agreement, either directly or indirectly, by stock ownership or otherwise; or (c) a business entity, the majority ownership of which is directly or indirectly common to the majority ownership of a Party to this Agreement. " BLA" means the Client' s Biological License Application relating to the formulation of the Product, and any supplements to such BLA as may be filed by the Client with the appropriate Regulatory Authority during the term hereof.

" Business Day" means a day other than a Saturday, Sunday or a day that is a statutory holiday in Monza, Milan or Ferentino (FR), Italy, or in Seattle, Washington, U.S.A.

" cGMPs" means current good manufacturing practices as described in the current Good Manufacturing Practices published by the European Commission in the " Guide to good manufacturing practice for medicinal products" (" The rules governing medicinal products for human use" , IV Volume), as specified by the competent Italian authorities and the FDA' s current good manufacturing practices as specified in the U.S. Code of Federal Regulation and the FDA' s guidance documents, and all successors regulations and guidance documents thereto.

" Client" means ZymoGenetics, a corporation existing under the laws of Washington, with offices at 1201 Eastlake Ave. East, Seattle, WA 98102.

" Client Release" means the release activities performed by the Client_pursuant to Section 6.5.3 of the Quality Agreement. " Components" means, collectively, all packaging components, raw materials and ingredients (including labels, product inserts and other labelling for the Product) listed on Schedule B, Appendix 3, required to be used in order to produce the Product in accordance with the Specifications.

" Confidential Information" means the confidential information of either Party disclosed to the other in any form or medium, or generated or created, in the course of performing this Agreement.

" Conversion Costs" means the difference between the unit Price for the Product and the relevant cost for the Components, supplied by Patheon, to be used for the manufacturing of the Product,


- 2 -

[ * ] Confidential Treatment Requested


i.e. Conversion Cost = (a) unit Price (b) cost for the Components supplied by Patheon;

" Date of Manufacture" means, for a batch of Product, the date on which it undergoes sterile filtration.

" Dedicated Equipment" means the equipment identified in Schedule F together with any equipment purchased on behalf of the Client pursuant to Section 2.1.2(a).

" Deficiency Notice" means a Release Deficiency Notice or a Post-Release Deficiency Notice, as the case may be, and as set out in Section 6.1.

" Effective Date" means January 1, 2006.

" EMEA" means the European Medicine Evaluation Agency. " EXW" means " Ex works" , as that term is defined in INCOTERMS 2000. " Facility" means the manufacturing facility of Patheon, placed at 87, Via Morolense, Ferentino (FR), where manufacturing of the Product under this Agreement shall take place.

" FDA" means the United States Food and Drug Administration. " Firm Orders" has the meaning specified in Section 5.2(c). " Initial Term" has the meaning specified in Section 8.1. " Intellectual Property" includes, without limitation, rights in patents, patent applications, formulae, trade-marks, trade-mark applications, trade-names, Inventions, copyright, industrial designs.

" Invention" means information relating to any innovation, improvement, development, discovery, computer program, device, trade secret, method, know-how, process, technique or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which it is contained and whether or not patentable or copyrightable.

" Inventory" means all inventories of Components purchased by Patheon and work-in-process produced or held by Patheon in connection with the manufacture of the Product.

" MA" means Client' s Marketing Authorization to be filed with any appropriate Regulatory Authority to market and sell the Product in a jurisdiction (e.g., a Marketing Authorisation pursuant to Directive 65/65 EEC (as amended) or any implementation of it under the laws of a relevant Member State).


- 3 -

[ * ] Confidential Treatment Requested


" ML" means Patheon' s Manufacturing Licence pursuant to Directive 75/319 EEC (as amended) or any implementation of it under the laws of a relevant Member State, which for this Agreement means the authorisation referred to in Schedule B, Appendix 1.

" Manufacturing Services" means the manufacturing, quality control, quality assurance and stability testing, packaging, storage and related services, as contemplated in this Agreement, required to produce Product from Active Pharmaceutical Ingredients and Components.

" Minimum Order Quantity" means the minimum number of batches of Product to be ordered and produced during a manufacturing campaign as set forth in Schedule C hereto.

" Manufacturing Requirements" means Patheon' s responsibilities and obligations with respect to the provision of Manufacturing Services as set forth in Section 2.4.

" Party(ies)" means either Patheon or the Client, or both of them, as the case may be.

" Patheon Release" means the delivery by Patheon of technical documentation and data as set out in Section 6.5 of the Quality Agreement.

" Post-Release Deficiency Notice" has the meaning set out in Section 6.2.

" Product" means the product named in Schedule B, Appendix 1, hereto.

" Quality Agreement" means the agreement between the Parties hereto setting out the respective responsibilities of the Parties in respect of the manufacturing process, testing and storage of the Product to be entered in to in substantially the form attached hereto as Schedule B.

" Regulatory Authorities" means:

(a) the FDA;

(b) the EMEA; or

(c) any regulatory body with similar regulatory authority in any other jurisdiction.

" Release Deficiency Notice" has the meaning set out in Section 6.1.


- 4 -

[ * ] Confidential Treatment Requested


" Specifications" means the file, for the Product, which is provided by the Client to Patheon and which contains documents relating to the Product, including, without limitation:

(a) specifications for Active Pharmaceutical Ingredient and Components;

(b) manufacturing, testing and packaging specifications;

(c) storage and shipping requirements; and

(d) any other technical information necessary to carry out the contracted operations correctly in accordance with the Marketing Authorization and any other legal requirements,

all as updated, amended and revised from time to time by the Client in accordance with the terms of this Agreement. The Specifications, as of the Effective Date, are attached hereto as Schedule B.

" Territory" means the United States of America and any other countries as set out in Schedule H hereto or as agreed in writing between the Parties during the term of this Agreement.

" Third Party Rights" means the Intellectual Property of any third party.

" Year" means, in the case of the first Year of this Agreement, the period starting from the Effective Date to December 31, 2006, and thereafter the twelve-month period commencing on January 1 of each calendar year. 1.2 Currency.

Unless otherwise indicated, all monetary amounts are expressed in this Agreement in Euro.

1.3 Sections and Headings.

The division of this Agreement into Articles, sections, subsections and Schedules and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to a Section or Schedule refers to the specified Section or Schedule to this Agreement. In this Agreement, the terms " Agreement" , " hereof" , " herein" , " hereunder" and similar expressions refer to this Agreement and not to any particular part, Section, Schedule or the provision hereof.


- 5 -

[ * ] Confidential Treatment Requested

1.4 Singular Terms .

Except as otherwise expressly provided herein or unless the context otherwise requires, all references to the singular shall include the plural and vice versa.

1.5 Schedules .

The following Schedules are attached to, incorporated in and form part of this Agreement:


Schedule A - Quality Agreement

Schedule B - Product Specifications, etc. Appendix 1 - Product Specifications both for both 5000 U and 20,000 U Appendix 2 - Manufacturing Description Appendix 3 - Component Specifications, API and Raw Materials Appendix 4 - Manufacturing Batch Record (MBR) Signature Page Appendix 5 - Lot Numbering, Expiration Date Appendix 6 - Quality Control Specifications and Quality Control Documentation

Schedule C - Minimum Run Quantity and Unit Prices both for 5000 U and 20,000 U

Schedule D - API and Agreed Value of API

Schedule E - Letter Agreement

Schedule F - Dedicated Equipment

Schedule G - Binding Yearly Forecast (thrombin forecast)

Schedule H - Territory

ARTICLE 2 -

PATHEON' S OBLIGATIONS

2.1 Technical Transfer Activities and Dedicated Equipment .

2.1.1 Technical Transfer Activities .

Patheon shall perform all of the technical transfer activities related to the Product set out in the Letter Agreement executed between the Parties on March 16, 2006, a copy of which is attached as Schedule E. The Parties may, from time to time, amend or supplement the Letter Agreement in writing signed by the Parties; provided that this Agreement shall be amended to include a copy of any such writing as a revision to Schedule E.


- 6 -

[ * ] Confidential Treatment Requested

2.1.2 Dedicated Equipment.

(a) During the entire Term, the Client may at times utilize Patheon to select and order Dedicated Equipment in addition to the equipment identified in Schedule F. In such case, the Client shall reimburse Patheon for all such reasonable costs agreed upon in writing and actually incurred by Patheon and shall pay to Patheon a fee equal to [ * ] percent ( [ * ] %) of the actual purchase price of the equipment. In addition, the Parties shall update Schedule F to identify the additional Dedicated Equipment. Patheon agrees to accommodate, at Client' s cost, a reasonable amount of additional Dedicated Equipment, including, without limitation, at least one additional freezer. At the Client' s request and expense, Patheon shall be responsible for installing and qualifying at the Facility, any and all new or used equipment and tooling necessary for the manufacturing of the Product.

(b) Patheon shall obtain the Client' s prior written approval for all costs and expenses associated with installation and qualification of the Dedicated Equipment to be installed at the Facility (including without limitation labour and engineering costs) and the Client shall reimburse Patheon for all such reasonable costs actually incurred by Patheon within 30 days of the date of the relevant invoice issued by Patheon.

(c) The Dedicated Equipment shall at all times remain the sole property of the Client. Patheon shall use commercially reasonable efforts to identify and track each item of Dedicated Equipment e.g., maintaining an inventory of the Dedicated Equipment noting serial numbers when possible and/or physically marking items of dedicated equipment with labels or tags. Patheon shall acquire no right, title or interest to any Dedicated Equipment. Patheon and its Affiliates shall not claim or file, and shall not allow any Third Party to claim or file, a security interest in any Dedicated Equipment. (d) Patheon shall be responsible for the costs and expenses of routine maintenance and servicing of the Dedicated Equipment so long as all such equipment remains at the Facility. The Client shall be responsible for the cost of non-routine maintenance and servicing of the Dedicated Equipment (such as major repairs and parts replacement). Patheon shall notify the Client prior to the performance of any non-routine maintenance or servicing, and the Client shall directly pay or promptly reimburse Patheon (as the case may be) for any such maintenance or servicing costs that the Client has authorized to be incurred and for which it is responsible.

- 7 -

[ * ] Confidential Treatment Requested

(e) Patheon agrees that the Dedicated Equipment shall only be used by Patheon to provide the Manufacturing Services. 2.2 Manufacturing Services .

Patheon shall provide the Manufacturing Services for the unit prices as set out in Schedule C and other relevant Schedules attached hereto in order to produce Product for the Client. The Client shall purchase Product for sale in the Territory from Patheon pursuant to the terms of this Agreement. For the sake of clarity, the Client may obtain manufacturing services relating to the Product also from one or more third parties, and Patheon shall, at the Client' s cost and expense, use commercially reasonable efforts to cooperate with the Client to transfer the manufacturing process associated with the Product to the Client during the term of this Agreement, subject to Article 8. In providing the Manufacturing Services, Patheon shall perform each of the following services:

(a) Conversion of Active Pharmaceutical Ingredient and Components . Patheon shall convert Active Pharmaceutical Ingredient and Components into the Product. Patheon shall promptly inspect and check the Active Pharmaceutical Ingredient for identity, quantity and the integrity of containers upon delivery thereof at the Facility and shall promptly give the Client written notice of any Active Pharmaceutical Ingredient which are delivered with apparent defects.

(b) Quality Control and Quality Assurance . Patheon shall perform the quality control and quality assurance testing specified in the Quality Agreement. Each time Patheon releases the Product to the Client, pursuant to Section 6.1, it shall provide the Client with a certificate of analysis that sets out the test results for each batch of Product, and that certifies that such batch has been evaluated by Patheon' s Quality Control/Quality Assurance department and that the Product complies with the Specifications and other documents set forth in the Quality Agreement.

(c) Components . Patheon shall purchase and test the Components as set forth in Schedule B, Appendix 3, at Patheon' s expense or as otherwise specified by the Specifications.

(d) Stability Testing . Patheon shall not perform the stability testing on the Product, which shall be conducted by the Client. (e) Packaging . Patheon shall pack the Product in accordance with the Specifications. The Client shall carry out the secondary packaging of the Product.


- 8 -

[ * ] Confidential Treatment Requested

(f) Storage of API and Product . Patheon shall store the Active Pharmaceutical Ingredient and all Product in accordance with the Specifications. Patheon shall store Product for up to [ * ] Business Days after release by the Client at no additional charge. Following the [ * ] day, Client shall be charged at a rate of [ * ] ( [ * ] ) Euro per day per pallet for cold (2-8 degrees celsius) storage and [ * ] ( [ * ] ) Euro per pallet per day for ambient temperature storage.

2.3 Target Yield .

2.3.1 Within 30 days after the end of each Year, starting from the end of Year 2008, Patheon shall provide the Client with a yearly inventory report and reconciliation of the API held by Patheon, which shall contain the following information for any Year: Quantity Received: The total quantity of API received at the Facility during the applicable Year that passes Patheon' s inspection described in Section 2.2(a).

Quantity Dispensed: The total quantity of API dispensed at the Facility during the applicable Year. The Quantity Dispensed is calculated by determining (i) the Quantity Received, plus the inventory of API (including both the API not used at such date and the work-in-process API) held by Patheon, at the beginning of the applicable Year, less (ii) the inventory of usable API held at the end of such Year (including both the API not used at such date and the work-in-process API).

Quantity Converted: The total amount of API contained in the Product produced during the applicable Year and delivered by Patheon and not rejected as deficient Product or subject to recall or return pursuant to Sections 6.3 or 6.5, respectively.

After Patheon has produced a minimum of 10 batches (including the validation batches) and following the resolution of the issues set forth in Section 2.3.3 below and for any Product and has produced batches for at least 6 months at the Facility pursuant to this Agreement, the Parties will mutually agree in writing on the permanent target yield in respect of the Product at the Facility (each, a " Target Yield" Thereafter, Patheon shall strive to maintain the actual annual yield (" Actual Annual Yield" or " AAY" ) levels for the Product above the applicable Target Yield. The Target Yield shall be calculated as the mean of Quantity Converted divided by Quantity Dispensed for each of the 10 or more batches produced referenced above.

2.3.2 By December 31 of each Year, starting on December 31, 2008, Patheon shall provide to the Client a report (with accompanying calculation) reflecting the AAY at the Facility for such Year. The AAY shall be reflected as a percentage determined by dividing (i) the annual Quantity Converted for the Year by (ii) the annual Quantity Dispensed for the Year.


- 9 -

[ * ] Confidential Treatment Requested


Subject to Section 2.3.3, in the event that at the end of each Year the AAY in the relevant Year falls below the Target Yield as agreed pursuant to Section 2.3.1 (the percentage below the Target Yield, as applicable, being the " Shortfall Percentage" ), Patheon shall owe an amount to the Client equal to the [ * ] % of the API Value of the API represented by the Shortfall Percentage (the " Shortfall Value" ), up to the maximum amount as set out under Section 10.2(a)(iii). For the purposes of this Section 2.3.2, the Target Yield means the minimum average yield to be guaranteed by Patheon for the Product during each Year.

It remains however understood and agreed between the Parties that if at the end of the Year the AAY in the relevant Year exceeds the Target Yield as agreed pursuant to Section 2.3.1 (the percentage above the Target Yield, as applicable, being the " Over Percentage" ), any amount due to the Client pursuant to Section 10.2(a)(ii) shall be reduced/offset by the API Value corresponding to the Over Percentage for all Products.

2.3.3 The Parties agree that Patheon shall not be responsible for any loss or damage occurring in the Products, in any combination (e.g. 5,000 IU and 20,000 IU) during the validation activities and/or the manufacture of the Product for its distribution on the market, in case that such loss or damage is due to the " [ * ] issue" and/or the " [ * ] issue" in the first ten (10) lots (combination of 5,000 IU and 20,000IU Products) (" Assessment Lots" ) following implementation of the [ * ] .

The Client agrees to be invoiced on a per-batch basis for the Assessment Lots at a price detailed in Schedule C. Following the completion of the Assessment Lots, the Parties agree to consult with each other in good faith to reach consensus that the " [ * ] issue" and " [ * ] issue" have been successfully resolved. In the event that the Parties agree that the issues associated with the [ * ] and [ * ] have been resolved, Patheon agrees to charge Client on a per-vial basis (Schedule C). If the issues associated with the [ * ] and [ * ] are not successfully resolved, invoicing will remain on a per-batch basis but Patheon agrees to continue to use reasonable best efforts to resolve the [ * ] and [ * ] issues and achieve the best possible yield.

2.4 Manufacturing Requirements .

Patheon shall provide the Manufacturing Services in accordance with:

(a) the Specifications;

(b) any other terms and conditions provided in the Quality Agreement; and

(c) the conditions provided under the ML, the cGMPs and any other applicable legal requirements as specified by the competent Italian and European Public Authorities, as well as the U.S. FDA.


- 10 -

[ * ] Confidential Treatment Requested


ARTICLE 3

CLIENT' S OBLIGATIONS

3.1 Payment .

Pursuant to the terms of this Agreement, the Client shall pay Patheon for the provision of the Manufacturing Services according to the prices specified in Schedule C hereto (such prices and fees being subject to adjustment in accordance with the terms hereof).

3.2 Active Pharmaceutical Ingredient .

The Client shall, at its sole cost and expense, deliver Client released API to Patheon in such quantities and at such times as is otherwise sufficient to facilitate the provision of the Manufacturing Services by Patheon. The API shall be held by Patheon on behalf of the Client on the terms and subject to the conditions herein contained. The Parties acknowledge and agree that title to the API shall at all times belong to and remain the property of the Client. Patheon agrees that any API received by it shall only be used by Patheon to provide the Manufacturing Services.

ARTICLE 4 - CONVERSION FEES AND COMPONENT COSTS

4.1 Fees and Component Costs .

The prices and fees for the Manufacturing Services (which prices and fees do not include the cost of API) listed in Schedule C are intended by the Parties to be fixed for the Initial Term, subject to the amendments to such prices and fees provided for in this Article 4.


- 11 -

[ * ] Confidential Treatment Requested

4.2 Value Added Tax .

Patheon shall use commercially reasonable efforts to cooperate with and provide assistance to the Client in connection with VAT, through its administrative/finance department. Any associ ...