Common use of Compliance Audits Clause in Contracts

Compliance Audits. Flexion and its designated representatives shall have the right to audit all applicable non-financial records of Patheon for the purpose of determining Patheon’s compliance with the obligations set forth in this Agreement and the Technical Transfer Agreement, including Sections 2.2(a) and 6.2 of this Agreement, and the terms of any Purchase Order. Such audit right shall include the right to inspect: (a) the Materials used in the Manufacture of the Product, (b) the holding facilities for such Materials and Product, (c) the Equipment used in the Manufacture of the Product, (d) all non-financial records relating to the Manufacturing Suite and the Manufacturing of the Product (subject to any other restrictions set forth in this Agreement) and (e) all other documentation set forth in the Quality Agreement. Flexion shall provide Patheon with reasonable prior advance notice of its intention to conduct such audit and the Parties will determine a mutually agreeable date for such audit. Flexion shall include no more than […***…] of Flexion’s representatives in each such audit, with each such audit lasting no more than […***…] days without Patheon’s prior written consent. Flexion may exercise its audit rights under this Section 3.8 no more than […***…] per calendar year; provided that, in the event any of the following circumstances arise, Flexion may elect and Patheon shall permit Flexion to conduct additional audits in a timely manner: (i) where there is the occurrence of a condition or event relating to the Materials or any Product which constitutes a serious health risk; (ii) where either Party has received correspondence or a report from a Regulatory Authority pointing out a deficiency in the Product by or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in the event of a recall related to the Product. The Steering Committee will discuss the findings of any audit conducted by Flexion under this Section 3.8 and shall mutually agree upon a plan to remedy any issues identified by Flexion in such audit and Patheon shall use commercially reasonable efforts to implement such plan in a timely manner. Patheon will support the first Product approval, including its inspection if required, of the FDA or equivalent regulatory launch for other jurisdictions (where applicable) (a “PAI”) (including one mock-readiness review and efforts conducted with Flexion representatives in advance of such inspection). Patheon will be prepared for the successful completion of the PAI with respect to the Manufacturing of the Product at the Facility a minimum of […***…] in advance of the anticipated date of the PAI and Patheon will cooperate with Flexion to prepare for and to complete the PAI in accordance with guidelines and requirements set forth by the applicable Regulatory Authority. Additional support (including, without limitation, subsequent regulatory launches or Product approval inspections/resulting reports for other jurisdictions) will be subject to additional fees.

Compliance Audits. Flexion and its designated representatives shall have the right to audit all applicable non-financial records of Patheon for the purpose of determining Patheon’s compliance with the obligations set forth in this Agreement and the Technical Transfer Agreement, including Sections 2.2(a) and 6.2 of this Agreement, and the terms of any Purchase Order. Such audit right shall include the right to inspect: (a) the Materials used in the Manufacture of the Product, (b) the holding facilities for such Materials and Product, (c) the Equipment used in the Manufacture of the Product, (d) all non-financial records relating to the Manufacturing Suite and the Manufacturing of the Product (subject to any other restrictions set forth in this Agreement) and (e) all other documentation set forth in the Quality Agreement. Flexion shall provide Patheon with reasonable prior advance notice of its intention to conduct such audit and the Parties will determine a mutually agreeable date for such audit. Flexion shall include no more than […***…] of Flexion’s representatives in each such audit, with each such audit lasting no more than […***…] days without Patheon’s prior written consent. Flexion may exercise its audit rights under this Section 3.8 no more than […***…] per calendar year; provided that, in the event any of the following circumstances arise, Flexion may elect and Patheon shall permit Flexion to conduct additional audits in a timely manner: (i) where there is the occurrence of a condition or event relating to the Materials or any Product which constitutes a serious health risk; (ii) where either Party has received correspondence or a report from a Regulatory Authority pointing out a deficiency in the Product by or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in the event of a recall related to the Product. The Steering Committee will discuss the findings of any audit conducted by Flexion under this Section 3.8 and shall mutually agree upon a plan to remedy any issues identified by Flexion in such audit and Patheon shall use commercially reasonable efforts to implement such plan in a timely manner. Patheon will support the first Product approval, including its inspection if required, of the FDA or equivalent regulatory launch for other jurisdictions (where applicable) (a “PAI”) (including one mock-readiness review and efforts conducted with Flexion representatives in advance of such inspection). Patheon will be prepared for the successful completion of the PAI with respect to the Manufacturing of the Product at the Facility a minimum of […***…] in advance of the anticipated date of the PAI and Patheon will cooperate with Flexion to prepare for and to complete the PAI in accordance with guidelines and requirements set forth by the applicable Regulatory Authority. Additional support (including, without limitation, subsequent regulatory launches or Product approval inspections/resulting reports for other jurisdictions) will be subject to additional fees.* Certain Confidential Information Omitted - 26 -

Compliance Audits. Flexion MDCO shall maintain complete and accurate books and records relating to its designated representatives compliance with Applicable Law, the MDCO Policies and the Compliance Provisions (AB/AC) (collectively, the “Compliance Records”) with respect to its obligations under this Agreement for a period of five (5) years after the period to which such records relate or such longer period as required by Applicable Law, which Compliance Records shall include: (a) its policies and procedures concerning compliance with Applicable Law, the MDCO Policies and the Compliance Provisions (AB/AC) with respect to its obligations under this Agreement, (b) records of any investigations and remedial and disciplinary actions taken to address material violations of Applicable Law, the MDCO Policies or the Compliance Provisions (AB/AC) with respect to its obligations under this Agreement and (c) records of any payments made in connection with this Agreement. Upon reasonable advance written notice to MDCO, AstraZeneca shall be entitled, at its expense, to have access to and audit the Compliance Records for a period of five (5) years after the period to which such records relate or such longer period as required by Applicable Law. AstraZeneca may exercise this audit right no more frequently than once during any twelve (12)-consecutive month period; provided that if any audit by AstraZeneca under this Section 6.3 reveals that MDCO (including through any MDCO Respective Party Representative) is or was not in material compliance with Applicable Law, the MDCO Policies or the Compliance Provisions (AB/AC) with respect to its obligations under this Agreement, AstraZeneca shall have the right to audit all applicable conduct such additional audits during such twelve (12)-consecutive month period as may be reasonably required by AstraZeneca to determine whether MDCO has appropriately remedied such non-financial records of Patheon for the purpose of determining Patheon’s compliance. If an audit under this Section 6.3 reveals an issue with respect to MDCO's (including through any other MDCO Respective Party Representative) compliance with the Compliance Provisions (AB/AC) or if AstraZeneca otherwise has reason to believe that MDCO (including through any other MDCO Respective Party Representative) has breached or violated any Compliance Provision, AstraZeneca shall have the right to suspend any obligations on the part of AstraZeneca to make any payments to MDCO under this Agreement while AstraZeneca conducts an audit in accordance with the procedures set forth in this Agreement and the Technical Transfer Agreement, including Sections 2.2(a) and 6.2 of this Agreement, and the terms of any Purchase Order. Such audit right shall include the right to inspect: (a) the Materials used in the Manufacture of the Product, (b) the holding facilities for such Materials and Product, (c) the Equipment used in the Manufacture of the Product, (d) all non-financial records relating to the Manufacturing Suite and the Manufacturing of the Product (subject to any other restrictions set forth in this Agreement) and (e) all other documentation set forth in the Quality Agreement. Flexion shall provide Patheon with reasonable prior advance notice of its intention to conduct such audit and the Parties will determine a mutually agreeable date for such audit. Flexion shall include no more than […***…] of Flexion’s representatives in each such audit, with each such audit lasting no more than […***…] days without Patheon’s prior written consent. Flexion may exercise its audit rights under this Section 3.8 no more than […***…] per calendar year; provided that, in the event any of the following circumstances arise, Flexion may elect and Patheon shall permit Flexion to conduct additional audits in a timely manner: (i) where there is the occurrence of a condition or event relating to the Materials or any Product which constitutes a serious health risk; (ii) where either Party has received correspondence or a report from a Regulatory Authority pointing out a deficiency in the Product by or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in the event of a recall related to the Product. The Steering Committee will discuss the findings of any audit conducted by Flexion under this Section 3.8 and shall mutually agree upon a plan to remedy any issues identified by Flexion in such audit and Patheon shall use commercially reasonable efforts to implement such plan in a timely manner. Patheon will support the first Product approval, including its inspection if required, of the FDA or equivalent regulatory launch for other jurisdictions (where applicable) (a “PAI”) (including one mock-readiness review and efforts conducted with Flexion representatives in advance of such inspection). Patheon will be prepared for the successful completion of the PAI with respect to the Manufacturing of the Product at the Facility a minimum of […***…] in advance of the anticipated date of the PAI and Patheon will cooperate with Flexion to prepare for and to complete the PAI in accordance with guidelines and requirements set forth by the applicable Regulatory Authority. Additional support (including, without limitation, subsequent regulatory launches or Product approval inspections/resulting reports for other jurisdictions) will be subject to additional fees6.3.

Compliance Audits. Flexion (a) With the exception of “for cause” audits (e.g., audits arising from regulatory issues or material Product conformity issues), Client and its designated representatives shall will have the right to audit [***] per year free of charge all applicable non-financial records of Patheon for the purpose of determining to determine Patheon’s compliance with the obligations set forth in this Agreement and the Technical Transfer Agreement, including Sections 2.2(a) and 6.2 of this Agreement6.2, and the terms of any Purchase Order. Such This audit right shall will include the right to inspect: (a) the Materials used in the Manufacture of the Product, (b) the holding facilities for such Materials and Productthe Materials, (c) the Manufacturing Suite and all Equipment used in the Manufacture of the Product, (d) all non-financial records relating to the Manufacturing Suite and the Manufacturing of the Product (subject to any other restrictions set forth in this Agreement) and (e) all other documentation set forth in the Quality Agreement, in order to carry out a GMP, quality and/or compliance audit of those parts of the Facility involved in, or which could affect, the Manufacture of the Products. Flexion shall provide Client will give Patheon with reasonable [***] days prior advance notice of its intention to conduct such an audit and the Parties will determine a mutually agreeable date for such the audit. Flexion shall Client will include no more than […***…] of FlexionClient’s representatives in each such audit, with each such audit lasting no more than […***…] days days, in each case without Patheon’s prior written consent. Flexion may exercise its Client will also have the right to carry out follow up audits [***] if any observations have been noted during any audit rights carried out under this Section 3.8 no more than 3.10(a) (excluding any “for cause” audits as described above or any audits where critical or major observations have been noted). […***…] Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. (b) Client may request additional GMP-type audits, additional audit days, or the participation of additional auditors subject to payment to Patheon of a fee of $[***] for each additional audit day and $[***] per calendar year; provided that, in the event any of the following circumstances arise, Flexion may elect and Patheon shall permit Flexion to conduct audit day for each additional audits in a timely manner: (i) where there is the occurrence of a condition or event relating to the Materials or any Product which constitutes a serious health risk; (ii) where either Party has received correspondence or a report from a Regulatory Authority pointing out a deficiency in the Product by or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in the event of a recall related to the Product. The Steering Committee will discuss the findings of any audit conducted by Flexion under this Section 3.8 and shall mutually agree upon a plan to remedy any issues identified by Flexion in such audit and Patheon shall use commercially reasonable efforts to implement such plan in a timely mannerauditor. Patheon will support the first Product approval, including its inspection if required, of the FDA or equivalent regulatory launch for other jurisdictions (where applicable) (a “PAI”) (including one mock-readiness review and efforts conducted with Flexion representatives in advance of such inspection). Patheon will be prepared for the successful completion of the PAI with respect to the Manufacturing of the Product at the Facility a minimum of […***…] in advance of the anticipated date of the PAI and Patheon will cooperate with Flexion to prepare for and to complete the PAI in accordance with guidelines and requirements set forth by the applicable Regulatory Authority. Additional support (including, without limitation, subsequent regulatory launches or Product approval inspections/resulting reports for other jurisdictions) will be subject to additional fees. (c) Patheon will use Commercially Reasonable Efforts to ensure that any corrective or preventative actions identified in any audit carried out under this Section 3.10 that are agreed by the Parties are carried out in accordance with any agreed timeline and subject to payment by Client of any agreed fees. (d) Patheon will be responsible for ensuring the GMP compliance status of any authorized sub-contractors used to perform its obligations under this Agreement as described in Section 2.2(d). Patheon will assess each sub-contractor using Patheon’s standard vendor assurance program and will report its findings to Client within ten business days of Client’s request.

Compliance Audits. Flexion and With respect to any facility or site at which a Party, its designated representatives Affiliates or its Subcontractor conducts Development activities pursuant to this Agreement, the other Party shall have the right right, [***], upon reasonable written notice to audit all applicable non-financial such Party (and if applicable, such Affiliate or as described below, Subcontractor), and during normal business hours, to inspect such site and facility and any records of Patheon for the purpose of determining Patheonrelating thereto once per year, or more often with cause, to verify such Party’s compliance with the obligations terms of this Agreement relating to all applicable Laws, including Good Manufacturing Practice, Good Laboratory Practices, Good Clinical Practices and current standards for pharmacovigilance practice. Such inspection shall be subject to the confidentiality provisions set forth in this Agreement and Article 9. With respect to Licensor, prior to initiation of the Technical Transfer Agreement, including Sections 2.2(a) and 6.2 transfer of this Agreement, and the terms of any Purchase Order. Such audit right shall include the right to inspect: (a) Licensed Technology in connection with the Materials used to Licensee in accordance with Article 8.4, Licensor shall have the Manufacture of the Productright, (b) the holding facilities for such Materials and Product, (c) the Equipment used in the Manufacture of the Product, (d) all non-financial records relating to the Manufacturing Suite and the Manufacturing of the Product (subject to any other restrictions set forth in this Agreement) and (e) all other documentation set forth in the Quality Agreement. Flexion shall provide Patheon with reasonable prior advance notice of its intention to conduct such audit and the Parties will determine a mutually agreeable date for such audit. Flexion shall include no more than […***…] of Flexion], upon reasonable written notice to Licensee and/or its Affiliates, as applicable, and during normal business hours, to inspect such site and facility and any records relating thereto to verify Licensee’s representatives in each such audit, and/or its Affiliate’s compliance with each such audit lasting no more than […***…] days without Patheon’s prior written consent. Flexion may exercise all applicable Laws with respect to any facility or site at which Licensee and/or its audit rights under this Section 3.8 no more than […***…] per calendar year; provided that, in the event any of the following circumstances arise, Flexion may elect and Patheon shall permit Flexion Affiliates intends to conduct additional audits in a timely manner: (i) where there is the occurrence of a condition or event relating Manufacturing activities pursuant to the Materials or any Product which constitutes a serious health risk; (ii) where either this Agreement. Each Party has received correspondence or a report from a Regulatory Authority pointing out a deficiency in the Product by or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in the event of a recall related agrees to the Product. The Steering Committee will discuss the findings of any audit conducted by Flexion under this Section 3.8 and shall mutually agree upon a plan to remedy any issues identified by Flexion in such audit and Patheon shall use commercially reasonable efforts to implement such plan include in any contract or other written arrangement with its Subcontractors a timely manner. Patheon will support clause permitting the first Product approval, including other Party to exercise its inspection if required, of the FDA or equivalent regulatory launch for other jurisdictions (where applicable) (a “PAI”) (including one mock-readiness review and efforts conducted with Flexion representatives in advance of such inspectionrights under this Article 4.5(d). Patheon will be prepared In the event a Party is unable to secure such inspection rights from any of its Subcontractors, such Party agrees to secure such rights for itself and, if requested by the successful completion of the PAI with respect to the Manufacturing of the Product at the Facility a minimum of other Party, shall exercise such rights, […***…] in advance ], on behalf of the anticipated date other Party and fully report the results thereof to the other Party. If Licensee desires to conduct such an audit of Licensor’s manufacturing Subcontractors, the PAI and Patheon Parties will reasonably cooperate with Flexion to prepare minimize the number of separate audits being conducted by Licensor of such Subcontractor by, for and example, allowing Licensee to complete the PAI participate in accordance with guidelines and requirements set forth by the applicable Regulatory Authority. Additional support (including, without limitation, subsequent regulatory launches an audit being conducted for Licensor or Product approval inspections/resulting reports for one of its other jurisdictions) will be subject to additional feeslicensees.

Compliance Audits. Flexion (a) From time to time as EPIR may elect during the Term (but no more than once each calendar year), during normal business hours and its designated upon reasonable notice from EPIR (but not less than ten (10) business days’ prior notice), SESI shall permit duly authorized representatives shall have of EPIR to review and inspect, to the right extent relevant to audit all applicable non-financial SESI’s marketing and distribution of the Products, the premises, facilities, inventories of the SESI Products, records of Patheon and documentation maintained by SESI for the purpose of determining Patheon’s compliance by SESI with the its obligations set forth in this Agreement and the Technical Transfer Agreement, including Sections 2.2(a) and 6.2 of under this Agreement, and the terms of any Purchase Order. Such audit right shall include the right to inspect: (a) the Materials used in the Manufacture of the Product, (b) From time to time as SESI may elect during the holding facilities Term (but no more than once each calendar year), during normal business hours and upon reasonable advance notice from SESI (but not less than ten (10) business days’ notice), EPIR shall permit duly authorized representatives of SESI to review and inspect, on the premises of EPIR or its relevant subcontractors each manufacturing facility for the Energy Products and on the premises of EPIR where such Materials records and Productinventory are kept, (c) the Equipment used in the Manufacture inventory of the ProductEnergy Products, (d) all non-financial manufacturing documentation and EPIR’s quality control records relating to the storage of the Energy Products to ensure compliance with Good Manufacturing Suite Practices, quality control standards and the Manufacturing packaging and labeling for the Energy Products; and with applicable terms of this Agreement pertaining to the use of the Product (subject SESI Trademarks; provided, however, that except as otherwise provided herein, nothing in the foregoing shall allow or be construed to allow SESI to have access to any other restrictions confidential manufacturing know-how or trade secrets of EPIR or any records containing or pertaining to the same. EPIR warrants to SESI that the Energy Products will be free from material defects in material and workmanship. A material defect shall exist only if a Energy Product does not meet a Product Specification approved in advance by the TDB. Subject to the conditions and limitations set forth in this Agreement) and (e) all other documentation set forth in below, EPIR will, at its option, either repair or replace the Quality Agreement. Flexion shall provide Patheon with reasonable prior advance notice of its intention to conduct such audit and the Parties will determine a mutually agreeable date for such audit. Flexion shall include no more than […***…] of Flexion’s representatives in each such audit, with each such audit lasting no more than […***…] days without Patheon’s prior written consent. Flexion may exercise its audit rights under this Section 3.8 no more than […***…] per calendar year; provided that, in the event defect Energy Product or any part of the following circumstances arisedefective Energy Product. Repaired or replaced Energy Products will be provided by EPIR to SESI on an exchange basis, Flexion may elect and Patheon will be either new or refurbished to be functionally equivalent to new. If EPIR is unable to repair or replace the product, it will refund to SESI the amount paid to EPIR by SESI for that Energy Product. Repair or replacement of, or refund for, defective Energy Products shall permit Flexion be SESI’s sole and exclusive remedy for violation of this Warranty. This limited warranty does not cover any damage to conduct additional audits in a timely manner: (i) where there is Energy Product which occurs during shipment from EPIR to SESI, or that results from improper installation, accident, abuse, misuse, natural disaster, abnormal mechanical or environmental conditions, or any unauthorized disassembly, repair, or modification. This limited warranty also does not apply to any Energy Product on which the occurrence of a condition original identification information has been altered, obliterated or event relating removed, has not been handled or packaged correctly, has been sold as second-hand or has been resold contrary to the Materials US export regulations. This limited warranty covers only repair, replacement or refund for defective Energy Products, as provided above. EPIR is not liable for, and does not cover under warranty, any loss of data or any Product which constitutes a serious health risk; (ii) where either Party has received correspondence costs associated with determining the source of system problems or a report from a Regulatory Authority pointing out a deficiency in the Product by removing, servicing or on behalf of Patheon; (iii) where the Specifications have not been complied with or there is otherwise evidence that compliance with the Specifications is at risk; or (iv) in installing Energy Products. In the event of a recall related to claim, EPIR’s sole obligation shall be replacement of the Product. The Steering Committee will discuss the findings of any audit conducted by Flexion under this Section 3.8 and shall mutually agree upon a plan to remedy any issues identified by Flexion in such audit and Patheon shall use commercially reasonable efforts to implement such plan in a timely manner. Patheon will support the first Product approval, including its inspection if required, of the FDA or equivalent regulatory launch for other jurisdictions (where applicable) (a “PAI”) (including one mock-readiness review and efforts conducted with Flexion representatives in advance of such inspection). Patheon will be prepared for the successful completion of the PAI with respect to the Manufacturing of the Product at the Facility a minimum of […***…] in advance of the anticipated date of the PAI and Patheon will cooperate with Flexion to prepare for and to complete the PAI in accordance with guidelines and requirements set forth by the applicable Regulatory Authority. Additional support (including, without limitation, subsequent regulatory launches or Product approval inspections/resulting reports for other jurisdictions) will be subject to additional fees.