Exhibit 10.86

Portions of this exhibit marked [*] are requested to be treated confidentially.

EXECUTION VERSION

AGREEMENT FOR ADVANCE AGAINST COMMITMENT FEE

This Agreement for Advance Against Commitment Fee is made on this 18th day of
July, 2011 (the “Advance Agreement” or this “Agreement”)

BETWEEN

Salix Pharmaceuticals, Inc. a California corporation having its principal
executive offices at 1700 Perimeter Drive, Morrisville, North Carolina 27560,
U.S.A. (hereinafter referred to as “Salix” which expression shall unless it be
repugnant to the context or meaning thereof be deemed to mean and include its
successors and permitted assigns) of the ONE PART

AND

Glenmark Pharmaceuticals Limited, a Company incorporated under the laws of India
and having its Registered Office at B/2, Mahalaxmi Chambers, 22, Bhulabhai Desai
Road, Mumbai 400 026, India and its Corporate Office at Glenmark House, B. D.
Sawant Marg, Chakala, Andheri East, Mumbai 400 099, India (hereinafter referred
to as “Glenmark” which expression shall unless it be repugnant to the context or
meaning thereof be deemed to mean and include its successors and permitted
assigns) of the OTHER PART

Salix and Glenmark are referred to collectively as “Parties”.

WHEREAS:-

 

1) Under a Manufacturing and Supply Agreement, dated 9 December 2008, between
Salix and Glenmark (the “Supply Agreement”), Glenmark has agreed to manufacture
and supply or have manufactured and supplied through its Affiliate (as such term
is defined in the Supply Agreement), Glenmark Generics Limited, to Salix the
compound oligomeric proanthocyanidin (OPC) of varying chain lengths with an
average molecular weight of approximately 2000 daltons (Crofelemer) meeting the
specifications set forth in the Supply Agreement (“Compound”);

 

2) Pending necessary regulatory approvals and [*] for the Compound and/or
product containing the Compound as an active ingredient, Salix has requested
Glenmark to scale up the production capacity of the Compound to be manufactured
by upgradation of Glenmark’s and/or its Affiliate, Glenmark Generics Limited’s,
existing facilities by purchase and installation of necessary additional
machinery, equipment, utilities, etc. and/or setting up of a new facility, so as
to produce Compound in an amount equivalent to [*] (as such term is defined in
the Supply Agreement) after [*] for [*] plus [*] of [*] with [*] to be supplied
by [*] at a new facility (“Upgradation”);

[*] Confidential treatment requested.

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3) In connection with the Upgradation, Salix and Glenmark are, simultaneously
with their entry into this Agreement, amending and restating the Supply
Agreement to reflect new and amended terms upon which Glenmark will supply
Compound to Salix (the “Amendment and Restatement”);

 

4) The Upgradation at the new facility is specifically for the manufacture of
Compound which will be manufactured by Glenmark, to the extent of Salix’s
requirements, exclusively for Salix;

 

5) In view of the substantial investments being made by Glenmark towards the
Upgradation [*] the Compound and/or product containing the Compound as an active
ingredient and in view of the risk associated with the same as the Upgradation
being specifically for the manufacture of Compound to be manufactured by
Glenmark, to the extent of Salix’s requirements, exclusively for Salix, Salix
has agreed to pay to Glenmark an agreed amount as an advance against a
commitment fee on the terms and conditions specified herein;

NOW THEREFORE, in consideration of the foregoing premises, the mutual promises
and covenants of the Parties contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree, declare and confirm hereto as follows:

 

1. Glenmark shall, upon Salix’s request, at Glenmark’s own cost and expense,
complete the said Upgradation per the [*] provided by Salix and also as per the
specifications and guidelines related to the Compound which Salix wishes to
purchase from Glenmark.

 

2. In view of the substantial investment to be made by Glenmark towards
Upgradation pending the [*] for the Compound and/or product containing the
Compound as an active ingredient and in view of the risk associated with the
same as the Upgradation being specifically for the manufacture of Compound to be
manufactured, to the extent of Salix’s requirements, exclusively for Salix as
mentioned above, Salix agrees and undertakes to procure from Glenmark, in
accordance with and subject to the terms and provisions of the Amendment and
Restatement, such amounts of Compound as are contemplated by Section 2.1(b) of
the Amendment and Restatement.

 

3. Salix further agrees to pay Glenmark, within [*] ([*]) days of signing of
this Agreement, an amount of fifteen million United States dollars ($15,000,000)
as an advance (the “Advance”) against the Commitment Fee contemplated by
Section 2.8(e) of the Amendment and Restatement (the “Commitment Fee”).

 

4. The Advance shall be charged by Glenmark to the extent of three million
United States dollars ($3,000,000) on each of the first through fifth
anniversaries of the date of this Agreement to reduce the amount of the
installment then required to be paid by Salix in respect of the Commitment Fee
under Section 2.8(e) of the Amendment and Restatement, such that on the fifth
anniversary of the date of this Agreement the entire Advance shall stand
extinguished and so applied.

[*] Confidential treatment requested.

 

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5. Glenmark shall use commercially reasonable efforts to perform the
Upgradation. In the event that the Parties agree that Glenmark has failed to
undertake commercially reasonable efforts to perform the Upgradation within a
period of [*] from the date of this Agreement, or any further extension mutually
agreed by the Parties, then the Parties will work towards remedying/curing the
situation. In the event that any failure by Glenmark to use commercially
reasonable efforts to perform the Upgradation has not been remedied/cured in a
reasonable time, then Salix shall be entitled to a return of the Advance minus
the amounts spent by Glenmark up to that time in the Upgradation. Should the
Parties be unable to agree whether Glenmark has undertaken commercially
reasonable efforts to perform the Upgradation and/or whether the situation has
been remedied/cured in a reasonable time, then either Party may bring an action
to resolve the dispute in accordance with Section 9.7 of the Amendment and
Restatement.

 

6. In the event that Salix terminates the Amendment and Restatement other than
pursuant to Section 7.2(c)(i) thereof or Glenmark terminates the Amendment and
Restatement pursuant to Section 7.2(c)(i) thereof, then the balance of the
Advance then lying with Glenmark shall stand forfeited.

 

7. It is clarified that the Commitment Fee shall be exclusive and in addition to
the Purchase Price (as defined in the Amendment and Restatement) payable by
Salix to Glenmark under the Amendment and Restatement for the Compound supplied
by Glenmark to Salix.

 

8. The Parties agree that Sections 3, 4, 5, and 6 of this Agreement shall govern
in the event of a conflict between the provisions of this Agreement and any
provision in the Amendment and Restatement.

 

9. Recitals hereinabove shall constitute an integral part of this Agreement.

 

10. Neither of the Parties hereto may assign this Agreement or any of its rights
and obligations hereunder except in connection with an assignment of the
Amendment and Restatement pursuant to Section 9.10 thereof.

 

11. No failure or delay on the part of a Party in exercising any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or a future
exercise thereof or the exercise of any other right or remedy granted hereby or
by law.

 

12. If any provision of this Agreement is held to be invalid or unenforceable
for any reason, it shall be adjusted rather than voided, if possible, in order
to achieve the intent of the Parties to the fullest extent possible. In any
event, all other provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.

 

13. This Agreement, together with the Amendment and Restatement, constitutes the
entire agreement and understanding between the Parties concerning the subject
matter hereof and supersedes all prior discussions, agreements and negotiations
between them as to the subject matter hereof.

[*] Confidential treatment requested.

 

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14. No amendment of this Agreement shall be effective unless made in writing and
signed by a duly authorized representative of each Party.

 

15. This Agreement shall be governed and interpreted in accordance with the law
of State of New York, excluding any conflicts or choice of law rule or principle
that might otherwise refer construction or interpretation of this Agreement to
the substantive law of another jurisdiction.

 

16. Any action, suit or proceeding concerning any matter arising out of or
relating to this Agreement shall be governed by and brought in accordance with
the provisions of Section 9.7(b), (c) and (d) of the Amendment and Restatement.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year first above written.

SALIX PHARMACEUTICALS, INC.

By:- /s/ Carolyn J. Logan

Name:- Carolyn J. Logan

Title:- President and CEO

GLENMARK PHARMACEUTICALS LIMITED

By:- /s/ Glenn Saldanba                                             

Name:- Glenn Saldanba                                             

Title:- Chairman & Managing Director                  

 

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