Exhibit 10.41

COMMERCIAL SUPPLY AGREEMENT

     THIS COMMERCIAL SUPPLY AGREEMENT (this “Agreement”) is made as of
December 3, 2004 (the “Effective Date”), by and between ADVANCIS PHARMACEUTICAL
CORPORATION, a Delaware corporation (“Advancis”), and CEPH INTERNATIONAL
CORPORATION, a Commonwealth of Puerto Rico corporation (“CEPH”).

Recitals

     WHEREAS, CEPH manufactures and sells certain cephalexin pharmaceutical
products; and

     WHEREAS, Advancis desires to purchase products from CEPH, and CEPH is
willing to supply such products to Advancis, all upon the terms and conditions
of this Agreement;

     NOW, THEREFORE, the parties hereby agree as follows:

ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION

     1.1 Definitions. As used in this Agreement, the following capitalized terms
shall have the following meanings, unless the context otherwise requires:

     “Act” means the United States Federal Food, Drug and Cosmetic Act.

     “Affiliate” means any legal entity directly or indirectly controlling,
controlled by or under common control with a party to this Agreement. As used in
this definition, “control” means the legal power to direct or cause the
direction of the general management or policies of such entity through the
ownership of voting securities, by contract or otherwise.

     “Agreement” has the meaning set forth in the preamble.

     “ANDA” means the Abbreviated New Drug Application for the Products as filed
with the FDA by CEPH, as amended from time to time.

     “API” means cephalexin, the active pharmaceutical ingredient in the
Products.

     “Applicable Laws” means all applicable laws, rules, regulations and
guidelines (including any such laws, rules, regulations or guidelines issued by
any federal, state, or local regulatory agency, department, bureau or other
government entity) that may apply to the testing, development, manufacture,
packaging, distribution, storage, import, export, handle, transport, disposal,
marketing, sale or use of the Products in the Territory or the performance of
either party’s obligations under this Agreement, including the Act, all
applicable environmental laws, rules, regulations and guidelines and all cGMPs.

     “Batch Records” has the meaning set forth in Section 4.6.

 

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     “cGMPs” means the Current Good Manufacturing Practices regulations of the
FDA.

     “Confidential Information” means all secret, confidential or proprietary
data, know-how and related information, including (a) all Regulatory
Applications, regulatory and clinical materials and related Regulatory Filings,
applications and data, (b) the content of any unpublished patent applications,
(c) operating methods and procedures, (d) marketing, manufacturing, distribution
and sales methods and systems, (e) sales figures, pricing policies and price
lists and (f) other business information of either party; provided, that
Confidential Information shall not include any information that (i) is already
known to the Receiving Party at the time of disclosure by the Disclosing Party,
as demonstrated by competent proof, (ii) is or becomes generally available to
the public other than through any act or omission of the Receiving Party,
(iii) is acquired by the Receiving Party, free of an obligation of
confidentiality, from a third party who is not, directly or indirectly, under an
obligation of confidentiality to the Disclosing Party with respect to such
information, or (iv) is developed independently by the Receiving Party without
use, direct or indirect, of Confidential Information of the Disclosing Party.

     “Delivery Date” has the meaning set forth in Section 2.2(c).

     [***]

     “Disclosing Party” has the meaning set forth in Section 9.1.

     “FDA” means the United States Food and Drug Administration or any successor
thereto.

     “Finished Package Form” means the Products filled, inspected, labeled,
packaged and packed in bottles or blister packaging in accordance with the
Specifications and in compliance with all Applicable Laws.

     “Firm Quantity” has the meaning set forth in Section 2.2(d).

     “Force Majeure Event” has the meaning set forth in Section 11.6.

     “Forecast” has the meaning set forth in Section 2.2(b).

     “Indemnified Party” has the meaning set forth in Section 8.3.

     “Indemnifying Party” has the meaning set forth in Section 8.3.

     “Initial Forecast” has the meaning set forth in Section 2.2(a).

     “Initial Term” has the meaning set forth in Section 10.1.

     “Labeling Specifications” means that portion of the Specifications relating
to labeling and packaging requirements of the Products (including all label copy
and printing on bottles and capsules), as provided by or approved by Advancis
and attached hereto as Schedule C.

     “Liability” has the meaning set forth in Section 8.1.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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     “MOVA” means MOVA Pharmaceutical Corporation, a Commonwealth of Puerto Rico
corporation.

     “Plant” means the CEPH facility located in Carolina, Puerto Rico, which
shall be used to manufacture the Products.

     “Products” means the cephalexin pharmaceutical products produced under the
ANDA in the presentations listed on Schedule A, whether branded as KEFLEX
products or as generic equivalents.

     “Purchase Order” has the meaning set forth in Section 2.2(c).

     “Quality Agreement” has the meaning set forth in Section 5.5.

     “Raw Materials” means the raw materials and ingredients described in the
Specifications.

     “Receiving Party” has the meaning set forth in Section 9.1.

     “Regulatory Approval” means all approvals (including price and
reimbursement approvals), licenses, registrations, or authorizations of any
federal, state or local regulatory agency, department, bureau or other
government entity, necessary for the manufacture, use, storage, import,
transport and sale of the Products.

     “Regulatory Authorities” means the FDA, as well as the national regulatory
authorities of the countries within the Territory with responsibility for
regulating the testing, manufacture, marketing, distribution, sale or use of the
Products.

     “Regulatory Filing” means an application for Regulatory Approval and any
other filing pursuant to the regulations and procedures required by any
Regulatory Authority in the Territory for the testing, manufacture, marketing,
distribution, sale or use of the Products.

     “Renewal Term” has the meaning set forth in Section 10.1.

     “Representatives” of a party means such party’s Affiliates, officers,
directors, agents and employees.

     “Secondary Supplier” has the meaning set forth in Section 2.6(b)(iv).

     “Specifications” means the specifications, procedures, requirements,
standards and criteria required to manufacture and package the Products,
including all formulae, Raw Materials, test methods, standards of quality
control and quality assurance, release criteria and instructions for the
Products, and master production records, all as provided by or approved by
Advancis and attached hereto as Schedule B, including the Labeling
Specifications.

     “Term” has the meaning set forth in Section 10.1.

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     “Territory” means the fifty (50) states and the District of Columbia
constituting the United States of America and any territory or commonwealth
owned or controlled by the United States of America, including the Commonwealth
of Puerto Rico.

     1.2 Rules of Construction. The definitions in this Agreement shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,” “includes” and “including” shall
be deemed to be followed by the phrase “but not limited to.” All references
herein to Articles, Sections and Schedules shall be deemed references to
Articles and Sections of and Schedules to, this Agreement unless the context
shall otherwise require. All Schedules attached to this Agreement shall be
deemed incorporated herein by reference as if fully set forth herein. Words such
as “herein,” “hereof,” “hereto,” “hereby” and “hereunder” refer to this
Agreement and to the Schedules, taken as a whole. “Or” is disjunctive but not
necessarily exclusive. Except as otherwise expressly provided herein: (a) any
reference in this Agreement to any agreement shall mean such agreement as
amended, restated, supplemented or otherwise modified from time to time; (b) any
reference in this Agreement to any law shall include corresponding provisions of
any successor law and any regulations and rules promulgated pursuant to such law
or such successor law; and (c) all terms of an accounting or financial nature
shall be construed in accordance with U.S. generally-accepted accounting
principles, as in effect from time to time. Neither the captions to Sections or
subdivisions thereof shall be deemed to be a part of this Agreement.

ARTICLE 2
PURCHASE AND SUPPLY OF PRODUCT

     2.1 Agreement to Supply.

          (a) During the Term, CEPH shall supply to Advancis, in accordance with
the Specifications and this Agreement, such Products in Finished Package Form
for sale, use or other disposition in the Territory as Advancis may order from
time to time during the Term. Except as explicitly provided in this Agreement,
Advancis shall purchase all of its requirements for Products listed on
Schedule A exclusively from CEPH. Notwithstanding the above: (i) if CEPH is
fully meeting its obligations hereunder, Advancis shall have the right to [***];
and (ii) as provided in Section 2.6, Advancis shall have the right to [***]. In
addition, Advancis shall have the right to [***].

          (b) The parties may, from time to time, mutually agree to include
additional Products by amending Schedule A. From time to time, Advancis may
require and CEPH may agree to [***]. The parties may decide to include certain
[***] by amending Schedule A. Each such [***], shall be manufactured by CEPH
[***] for Advancis until [***].

          (c) CEPH, in accordance with its customary practices of pharmaceutical
product manufacturing, maintains paper and/or electronic documents that track
its manufacturing process including, without limitation, Batch Records (as
defined in Section 4.6). CEPH shall arrange regular meetings with Advancis by
telephone or in person, as agreed upon by the parties, regarding all issues
relating to the supply of Products hereunder.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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     2.2 Forecasts; Purchase Orders.

     (a) Within [***] after the Effective Date, Advancis shall provide to CEPH
its initial twelve (12) month forecast for Advancis’ purchases of Products (the
“Initial Forecast”). The Initial Forecast shall cover the twelve (12) month
period commencing with the next calendar month following the month in which
Advancis delivers the Initial Forecast to CEPH. The Initial Forecast shall be in
good faith and nonbinding. For commercial launch supplies of Products, Advancis
shall provide its initial firm order no later than [***] prior to the designated
delivery date.

     (b) After the Initial Forecast, on or before the [***] of each calendar
quarter throughout the Term, Advancis shall provide to CEPH a twelve (12) month
rolling written forecast for its purchases of Products per month (each, a
“Forecast”). Each Forecast shall cover the twelve (12) month period commencing
with the next calendar quarter following the quarter in which Advancis delivers
such Forecast to CEPH. For example, if the delivery date of a Forecast were
[***], then the Forecast would cover the twelve (12) month period commencing
[***] and ending [***].

     (c) After providing its initial firm order, Advancis shall deliver to CEPH
purchase orders for the Products (each a “Purchase Order”) on a monthly basis.
Each Purchase Order shall be firm. The required shipment date for the Products
ordered in each Purchase Order shall be the date indicated by Advancis in each
Purchase Order (the “Delivery Date”). Advancis shall deliver each Purchase Order
to CEPH no later than ninety (90) days before the applicable Delivery Date. CEPH
shall confirm the Delivery Dates, in writing, within fifteen (15) days of
receipt of the Purchase Orders from Advancis. Each Purchase Order shall be
placed for entire lot quantities of Products as described in Schedule E. Each
Purchase Order shall designate the amount of each type of Product ordered by
Advancis (in entire lot quantities as described in Schedule E). For example,
Schedule F attached hereto provides hypothetical order amounts for Products.

     (d) With respect to each Purchase Order, the total number of units of
Products forecasted in the most recent Forecast for the month of the applicable
Delivery Date shall be referred to as the “Firm Quantity.” CEPH shall be
required to manufacture, supply and ship the quantities of Products ordered by
Advancis in each Purchase Order, up to [***] of the Firm Quantity (in entire lot
quantities as described in Schedule E). In addition, upon the request of
Advancis, CEPH shall use commercially reasonable efforts to manufacture, supply
and deliver to Advancis additional quantities of Products (i.e., quantities in
excess of [***] of the Firm Quantity). For each month throughout the Term,
Advancis shall order and agrees to purchase from CEPH no less than [***] of the
Firm Quantity (in entire lot quantities as described in Schedule E).

     (e) For each Purchase Order, CEPH shall deliver the ordered Products, in
accordance with Article 3, no later than [***] after the applicable Delivery
Date. Advancis shall be obligated to pay CEPH, in accordance with Article 3, for
quantities of Products produced and delivered by CEPH in accordance with the
instructions contained in the Purchase Orders.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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     2.3 Summary Purchase Reports. On the date of each shipment of Products,
CEPH shall submit to Advancis, via facsimile, a packing slip containing the ship
date, trailer number, contents and quantities of each shipment. Not later than
[***] of each calendar month during the term of this Agreement (beginning with
month in which the first delivery of Products occurs), CEPH shall submit to
Advancis, via facsimile, a report detailing the shipments made during the
calendar month immediately preceding the date of such report.

     2.4 Documents to be Included With Each Shipment. With each lot of Products
shipped to Advancis, CEPH shall provide Advancis (i) a certificate of analysis,
(ii) a certificate of compliance and disposition sheet, each signed by the
responsible quality official of CEPH, (iii) a summary in the English language,
including all deviations that may impact regulatory commitments or quality and
(iv) critical in-process control data, if any. The certificate of analysis shall
include the numerical results for each test (chemical, microbiological and
bacteriological) performed to assure results are in compliance with the
Specifications. CEPH also shall provide Advancis with Batch Records as provided
under Section 4.6.

     2.5 Standard Forms. Except as otherwise expressly agreed to by both parties
in writing, if any term of any Purchase Order, invoice or acknowledgment or
other document issued by either party in connection herewith conflicts with the
terms of this Agreement, the terms of this Agreement shall control. Subject to
the foregoing sentence, the terms of all Purchase Orders shall be deemed part of
this Agreement.

     2.6 Late Delivery; Inability to Supply.

     (a) CEPH shall provide Advancis prompt written notice if CEPH becomes aware
of any circumstance that may render it unable to timely supply to Advancis
Products as set forth herein. CEPH shall use its best efforts to avoid or
minimize any delay in delivery including, at Advancis’ reasonable request, the
expenditure of premium time and shipping via air or other expedited routing to
avoid Product stock-outs.

     (b) If CEPH fails to timely supply to Advancis Products as set forth
herein, Advancis may exercise, at its option, one or more of the following
remedies:

          (i) Notwithstanding anything to the contrary herein, in the event CEPH
fails to deliver within [***] of the requested delivery date, for reasons [***]
(but provided that CEPH gives notice to Advancis of such reasons prior to such
[***]), any Products pursuant to any Purchase Orders and the terms hereof,
Advancis may [***], provided however that [***].

          (ii) If Advancis does not cancel any non-delivered quantity of
Products, [***]. Any additional cost caused by these requirements shall be borne
by the party causing the delay.

          (iii) In the event that CEPH fails to deliver at least [***] of the
volume of Products per order for [***] orders, which order shall not to be
placed in the same month, or [***] of the sum of the Products ordered during
such [***] orders (provided, that CEPH shall not be deemed to have failed to
deliver any Products if delivery of such Products occurs within [***] of the
confirmed delivery date), for reasons other than those related to: (i) [***]; or
(ii) [***], the

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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price payable for any succeeding Products delivered against such original
Purchase Orders will be reduced by [***] for the total Purchase Order amount
which was unfulfilled below such [***] or [***] as applicable. However, in the
event that CEPH fails to deliver at least [***] of the volume of Products per
order for an additional order, that is, for [***] orders, then the price payable
for any succeeding Products delivered against such original Purchase Orders
shall be reduced by an additional [***], that is, for a total of [***], for the
total Purchase Order amount which was unfulfilled below such [***].

          (iv) Notwithstanding anything to the contrary herein, if CEPH is
unable for any reason, other than for reasons [***], to meet its supply
obligations of Products to Advancis for at least [***] during which time CEPH
fails to meet [***] in aggregate total of Advancis’ Purchase Orders, Advancis
shall have the right to [***] unless and until such time that CEPH has
demonstrated, to Advancis’ sole satisfaction, that it can resume supply of
Product and upon fulfillment by Advancis of any Product volume purchase
requirement in any [***] contract into which Advancis has entered. In such case,
CEPH shall cooperate with Advancis and provide reasonable assistance in its
efforts to [***]. The rights and obligations of the parties under this
Section 2.6(b) shall be notwithstanding the occurrence of any Force Majeure
Event.

     2.7 Shortfall Allocation. If at any time CEPH is unable to supply the
quantities of Products ordered by Advancis in a Purchase Order in accordance
with this Agreement, CEPH shall use [***] to supply Advancis’ requirements for
Products listed in Schedule A in accordance with Section 2.6 of this Agreement.
In such event , CEPH shall (i) immediately notify Advancis, (ii) have an ongoing
obligation to provide Advancis with its good faith estimate as to whether it is
able to fulfill Advancis’ requirements for Products hereunder, (iii) keep
Advancis fully-informed as to the portion of Advancis’ requirements for Products
that it will supply, (iv) provide Advancis with an estimate of how long it will
be unable to fulfill Advancis’ requirements for Products and (v) notify Advancis
at the time it resumes the ability to fulfill Advancis’ requirements for
Products.

     2.8 No Rights Granted. Nothing in this Agreement shall grant, directly or
indirectly, any rights to either party to any technology, information or
intellectual property owned by, possessed by or licensed to the other party at
the time of signing of this Agreement.

     2.9 Except as explicitly provided in this Agreement, Advancis shall not be
restricted from manufacturing, purchasing, marketing or otherwise dealing in any
cephalexin pharmaceutical products. Nothing in this Agreement shall restrict
Advancis from manufacturing, purchasing, marketing or otherwise dealing in any
pharmaceutical products other than the Products listed on Schedule A, at any
time from any source.

ARTICLE 3
PRICE; PAYMENT; DELIVERY

     3.1 Prices. The prices to be paid to CEPH by Advancis for the manufacture,
packaging, storage, handling and supply of the Products in Finished Package Form
shall be as set forth in Schedule E to this Agreement. The parties shall review
and adjust such prices in accordance with the provisions set forth in
Schedule E.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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     3.2 Invoices/Quantities. CEPH shall submit all invoices to Advancis upon
delivery of the Products by CEPH to the common carrier designated by Advancis.
Advancis shall pay CEPH for all delivered Products that meet the Specifications
and the requirements of Applicable Laws within thirty (30) days after invoice
date. If Advancis disagrees for any reason with the amount of any invoice
submitted by CEPH, Advancis shall notify CEPH of such disagreement within thirty
(30) days after receipt of such invoice, and the parties shall promptly attempt
to resolve the difference. Any portion of the invoiced amount that is not in
dispute shall be paid within thirty (30) days after the original date of the
invoice.

     3.3 Advancis Prices. Advancis shall have sole discretion to establish the
prices at which it sells the Products to its customers.

     3.4 Sales and Use Taxes. CEPH shall pay any federal, state, county or
municipal sales or use tax, excise or similar charge or other tax assessment
(other than that assessed against income) assessed or charged solely on the sale
of the Products to Advancis pursuant to this Agreement.

     3.5 Withholding Taxes. Payments made by Advancis under this Agreement shall
be reduced by any taxes, licenses, fees or other withholdings levied upon such
payments under Applicable Law.

     3.6 Shipping Instructions/Risk of Loss. CEPH shall deliver the Products
ordered by Advancis pursuant hereto [***]. Delivery shall be timely if it is
made at the [***] of the Delivery Date specified in the applicable Purchase
Order. CEPH shall prepare for shipping the Products on slip sheets and pallets
consistent with the Specifications and as instructed in writing by Advancis, and
shall include certificates of analysis and all documents specified in
Section 2.4 with all shipments of Products. In addition, at Advancis’ request,
CEPH shall arrange for the shipment of the Products from the Plant to the
location designated by Advancis, using the carrier designated by Advancis,
including scheduling freight pick up, loading the carrier’s trailer, arranging
for proper and reasonable insurance, and completing the shipping documentation,
all at [***] risk and expense. Risk of loss of all Products shipped hereunder
shall remain with [***].

ARTICLE 4
PRODUCTION; RECORDKEEPING

     4.1 Standards. CEPH shall manufacture and package the Products (including
disposal of waste) strictly in accordance with the Specifications, all
Applicable Laws and such trademark usage and other reasonable requirements as
may be instructed by Advancis and shall otherwise perform under this Agreement
in accordance with all Applicable Laws. All Products shall conform to the
Specifications. CEPH shall, at its sole cost and expense, obtain and comply with
all registrations, licenses, consents, permits and laws which may from time to
time be required by the Regulatory Authorities with respect to the manufacture
and packaging of the Products, the Plant and otherwise to permit the performance
of CEPH’s obligations hereunder. Advancis shall (or shall cause its distributors
to), at its sole cost and expense, obtain and comply with all registrations,
licenses, consents, permits and laws which may from time to time be required by
appropriate Regulatory Authorities with respect to the use, sale, distribution
and marketing of the

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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Products in the Territory and otherwise to permit the performance of Advancis’
obligations hereunder.

     4.2 Supply of Materials. CEPH shall procure, receive, test and release
against approved specifications sufficient quantities of Raw Materials and
packaging materials to enable CEPH to manufacture, finish, package and deliver
the Products in Finished Package Form in accordance with Advancis’ Purchase
Orders. CEPH shall maintain and provide all necessary resources (labor,
facilities, equipment and materials) for performance of its obligations under
this Agreement. CEPH shall be responsible for all expenses attributable to its
performance under this Agreement, and no such expense shall be chargeable to
Advancis, except as may be specifically authorized by Advancis in writing. CEPH
shall procure all API, Raw Materials and other components for Products in
accordance with the ANDA as approved by the FDA. Any proposed change to the
suppliers, for materials [***] shall be mutually agreed upon by CEPH and
Advancis in accordance with this Agreement. Both CEPH and Advancis may
participate in quality audits of all APIs, Raw Materials and other component
suppliers for changes that may have an impact with respect to any KEFLEX branded
Products [***].

     4.3 Storage Requirements. CEPH shall store all Raw Materials (including
API), packaging materials and Products in accordance with the Specifications in
accordance with cGMPs. Storage and handling of the foregoing shall be strictly
in accordance with the provisions of all Applicable Laws, the Quality Agreement,
the quality control programs and the standards set forth in the Specifications.
CEPH shall notify Advancis of any need to use a third party warehouse for any
Raw Materials or packaging materials and any such storage at such third party
warehouse shall be subject to Advancis’ prior written approval, which approval
shall not be unreasonably withheld. CEPH shall be responsible for any
incremental cost associated with using a third party warehouse for storage. Raw
Materials and packaging materials utilized by CEPH in connection with the
manufacture and packaging of the Products shall be primarily used by CEPH on a
first in, first out basis; provided, that Raw Materials shall not be used by
CEPH beyond the shelf life required under Applicable Laws or designated or
approved in writing by Advancis from time to time, as applicable.

     4.4 Maintenance of Facility and Equipment. CEPH shall maintain all
equipment utilized in the manufacture, packaging and supply of the Products
hereunder in good operating condition and shall maintain the Plant and such
equipment in accordance with (a) all Applicable Laws, including all applicable
regulations and requirements of the FDA, including cGMPs, and (b) all
requirements set forth in the Specifications.

     4.5 Disposal of Waste. CEPH shall, at its sole cost and expense, dispose of
all waste in a manner prescribed by and consistent with all Applicable Laws,
including environmental laws and regulations. Rejected Products returned to CEPH
shall be disposed of at CEPH’s sole cost and expense, provided, however that
Advancis shall be responsible for the cost of disposal for any Products rejected
for causes not caused by or under CEPH’s control.

     4.6 Batch Records. Records which set forth information relating to the
manufacturing, packaging and quality operation for each lot of the Products
(“Batch Records”) shall be prepared by CEPH for each lot at the time at which
such operations occur. The Batch

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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Records shall include but not be limited to the following documentation: (i) API
and other components test results, (ii) manufacturing, Raw Materials and other
components charge-in records; (iii) mixing and fillings records; (iv) packaging
records; (v) component traceability records; (vi) equipment usage records;
(vii) in-process and final laboratory testing results; (viii) in-process and
final product physical inspection results; (ix) yield reconciliation for bulk
and finished product; (x) label samples; (xi) labeling control records;
(xii) Product certificate of analysis for the Products; and (xiii) documentation
listing any deviations and/or excursions from approved procedure (as well as
CEPH’s investigation and corrective actions) incurred during the processing and
packaging of the lot. Advancis may, upon reasonable request, review the original
Batch Records for each lot when inspecting the Plant. In addition, in connection
with any development or follow-up work, including stability studies, or in
connection with any quality analysis/quality assurance review reasonably
conducted by Advancis in the event that any Products fail to meet
Specifications, then CEPH shall provide to Advancis a copy of the Batch Records
for any one or more lots of Products upon request by Advancis at Advancis’
expense. In addition, CEPH shall maintain such complete and accurate records
relating to the Products as may be required by the Act or any other Applicable
Law.

     4.7 Retention of Records. CEPH shall maintain all records required to be
maintained hereunder for a period of not less than [***] after the expiration
date of the Products or such longer period as may be required by Applicable Law.
After such retention period, CEPH shall give Advancis not less than [***] prior
written notice before destroying any such records and, upon Advancis’ request
and at Advancis’ expense, shall deliver such records to Advancis.

     4.8 Legal and Regulatory Filings and Requests. CEPH shall cooperate and be
diligent in responding to all requests for information from, and in making all
legally required filings with, the Regulatory Authorities.

     4.9 Specifications. The Specifications may be amended only by mutual
agreement of CEPH and Advancis, provided, that notwithstanding the foregoing,
CEPH may unilaterally amend the Specifications solely to the extent required to
obtain Regulatory Approval or to comply with changes in Applicable Laws. CEPH
shall promptly notify Advancis of any and all changes so made to the
Specifications.

ARTICLE 5
QUALITY CONTROL INSPECTION; REJECTION

     5.1 Quality Tests and Checks. CEPH shall perform all stability, validation,
Raw Material and in-process and finished product tests or checks required by the
Specifications and Applicable Laws as set forth in Schedule B. For purposes of
this Agreement, such tests and/or checks shall be considered routine and shall
be performed at CEPH’s expense. All tests and test results shall be carefully
performed, documented and summarized by CEPH in accordance with the
Specifications and Applicable Laws. Without limiting the foregoing, CEPH shall
test and inspect each lot of the Products for compliance with the Specifications
prior to release and shipment of such Products to Advancis. Each release of
Products by CEPH shall include all documents specified in Section 2.4. CEPH also
shall provide to Advancis all necessary material safety data sheets.

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AND EXCHANGE ACT OF 1934, AS AMENDED.

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     5.2 Rejection of Products.

          (a) For [***] following receipt by Advancis or its designee of any
shipment of Products hereunder, Advancis shall have the right to reject all or
any part of such shipment of Products that fails to meet the Specifications or
otherwise fails to conform to the representations and warranties given by CEPH
herein; provided that Advancis shall have the right to reject any Products which
contain latent defects within [***] after Advancis becomes aware of such latent
defects. For purposes of this Agreement, no rejection due to latent defects
shall be made after [***] after the expiration date of the applicable Products.
Such rejection shall be made effective by Advancis giving notice to CEPH
specifying the manner in which all or part of such shipment of Products fails to
meet the aforementioned requirements. Advancis may elect, in its sole
discretion, to have CEPH replace any rejected Products at CEPH’s sole cost
(including any applicable freight charges).

          (b) Upon Advancis’ delivery of any notice of rejection to CEPH, the
parties shall investigate the cause of the non-conformity or defect. If the
parties do not agree whether the Products conform to the Specifications, the
parties shall submit samples of the non-conforming Products in question to a
mutually agreed upon independent laboratory of recognized repute within the U.S.
pharmaceutical industry for evaluation with respect to conformance to the
Specifications. The decision of such independent laboratory shall be final and
binding upon the parties. The cost of such independent laboratory analysis shall
be paid for by the party who is determined to be incorrect with respect to the
conformity or non-conformity of the Products to the Specifications.

          (c) If Advancis rejects all or any portion of a shipment before the
date on which payment therefor is due, it may withhold payment for that shipment
or the rejected portion. All shipments or portions thereof which Advancis
rejects but which it is later determined Advancis did not have the right to
reject shall be paid within [***] following the day on which such determination
is made. If Advancis rejects a shipment or portion thereof of Product, after
payment therefor has been made, and such reason for rejection is attributable to
CEPH, as determined by an independent laboratory of the type described under
Section 5.2(b), Advancis shall be entitled to recoup the payment amount by, at
Advancis’ election, (i) CEPH issuing a prompt refund or (ii) Advancis setting
off such amount against the payment of future invoices or other amounts that may
become due hereunder. CEPH’s representations and warranties shall survive any
failure of Advancis to reject Products under this Section 5.2.

          (d) The provisions of this Section 5.2 shall survive termination or
expiration of this Agreement with respect to shipments of Products (or any
portions thereof) manufactured and packaged by CEPH that are received by
Advancis subsequent to the termination or expiration of this Agreement.

     5.3 Inspections and Audits by Advancis. Advancis shall have the right, upon
reasonable notice to CEPH, to, and to cause, Advancis’ outside counsel or other
representatives (a) to conduct a reasonable inspection related to the ANDA and
the intellectual property of CEPH relating to the Products and (b) to inspect
each plant where Products are being manufactured or stored to monitor compliance
by CEPH and its Affiliates with Applicable Laws

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TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
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AND EXCHANGE ACT OF 1934, AS AMENDED.

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and to otherwise confirm that the Products are being manufactured, and that CEPH
is operating, in compliance with the provisions of this Agreement in all
respects. CEPH shall have the right to have its representatives present
throughout such inspections. Advancis’ representatives shall promptly notify
CEPH of any non-compliance determined through such inspections and, upon receipt
of such notice, CEPH shall promptly and diligently rectify any non-compliance
and implement appropriate procedures with a view to avoiding repetition of such
non-compliance. CEPH shall promptly notify Advancis in writing of any
circumstances relating to any of its facilities that may affect the quality of
the Products. From time to time and by mutual agreement of the parties, Advancis
shall have the right to have a representative present during the manufacture
and/or testing of Products made for Advancis. Advancis’ representative(s) shall
comply with CEPH’s safety and GMP site requirements.

     5.4 Quality Agreement. In performing its respective obligations under this
Agreement, each of Advancis and CEPH agrees to be bound by the additional
quality control/assurance procedures and related provisions as set forth in the
document attached as Schedule D (the “Quality Agreement”). The Quality Agreement
may be amended from time to time upon the mutual written and duly executed
agreement of the parties. If any such amendment to the Quality Agreement results
in any additional costs to either Advancis or CEPH, the parties shall negotiate
in good faith an appropriate allocation of such additional costs between the
parties in accordance with the terms and provisions of Schedule E.

ARTICLE 6
ADVERSE EXPERIENCE; RECALL

     6.1 Customer Complaints.

          (a) CEPH and Advancis each shall report to the other any information
of which they become aware concerning any Product complaints within a reasonable
amount of time. CEPH shall investigate all Product complaints by analyzing the
Products, Raw Materials and other components to determine the cause, if any, of
an alleged Product manufacturing defect or failure. CEPH shall conduct such
investigations in the usual course in accordance with its standard operating
procedures for complaints. CEPH shall work to expeditiously provide a written
report of its determination within [***] from receipt of Advancis’ written
request for complaint investigation, which may include analysis and samples of
the lot of Products that is the basis for the complaint. In the event that
Advancis reasonably determines that any additional physical, chemical,
biological, or other evaluation should be conducted by CEPH in relation to a
Product complaint, Advancis shall so advise CEPH, and CEPH shall conduct the
necessary evaluations and advise Advancis of the results; provided that if CEPH
notifies Advancis that Advancis’ requests for additional analysis exceed CEPH’s
capacity to perform such analysis, then CEPH and Advancis shall negotiate in
good faith (i) whether to engage a third party to perform any analysis requested
by Advancis and (ii) the parameters of any analysis that the parties agree will
be performed by such third party.

          (b) Advancis or its designated distributors shall be responsible for
all correspondence with complainants on all complaints associated with the
Products.

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AND EXCHANGE ACT OF 1934, AS AMENDED.

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     6.2 Adverse Experience Reporting.

          (a) CEPH and Advancis each shall report to the other any information
of which they become aware concerning any adverse drug experience in connection
with the use of the Products, including the incidence or severity thereof.
Reports of routine adverse drug experiences of the type defined in
Section 314.80 of Title 21 of the United States Code of Federal Regulations
shall be exchanged by the parties on a quarterly basis. Reports of serious
adverse drug experiences of the type defined in Sections 312.32 and 314.80 of
Title 21 of the United States Code of Federal Regulations shall be made
available to the other party within five (5) calendar days after a party becomes
aware of such serious adverse drug experience. Upon receipt of any such
information concerning any serious drug experience by either CEPH or Advancis,
the parties shall promptly consult each other and use their best efforts to
arrive at a mutually acceptable procedure for taking such possible actions as
appropriate or required under the circumstances; provided, that nothing
contained herein shall be construed as restricting the right or duty of either
party to make a required report or submission to the FDA or take any other
action that it deems to be appropriate or required by Applicable Law. In all
events, the responsibility of making any reports to the FDA shall be upon CEPH
as holder of the ANDA.

          (b) [***] shall be responsible for all correspondence with
complainants on all complaints associated with the Products.

          (c) [***] shall be responsible for reporting all adverse drug
experiences to the FDA.

     6.3 Government Inspections, Seizures and Recalls. If the FDA or any other
Regulatory Authority conducts an inspection at CEPH’s premises, seizes any
Products and/or its Raw Materials, requests a recall of any Products, or
otherwise notifies CEPH of any violation or potential violation of any
Applicable Laws relating to or affecting the Products, CEPH shall notify
Advancis immediately and take such actions as may be required under the
Specifications or as reasonably instructed by Advancis.

     6.4 Voluntary Recalls. CEPH shall not initiate a voluntary recall until it
has communicated with Advancis concerning the necessity for a recall and the
scope of the recall. All coordination of any recall or field correction
activities involving the Products shall be handled jointly by the parties,
whether or not such action was initially requested by CEPH or Advancis.

     6.5 Expenses. In the event that any Products are recalled as a result of
(i) the [***] or (ii) the [***], then [***] shall bear all of the out-of-pocket
costs and expenses of such recall including expenses related to communications
and meetings with all required Regulatory Authorities, expenses of replacement
stock, the cost of notifying customers and costs associated with shipment of
recalled Products from customers and shipment of an equal amount of replacement
Products to those customers. [***] of the Products subject to the recall shall
not be included as an expense of the recall and shall, in all instances, be
borne by [***]. The remedy set forth above shall constitute the sole remedy with
respect to recalls; notwithstanding the foregoing, nothing in this Section 6.5
shall limit the indemnification provided under Article 8.

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SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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ARTICLE 7
REPRESENTATIONS AND WARRANTIES

     7.1 CEPH Warranties. CEPH represents and warrants to Advancis as follows:

          (a) CEPH has the full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.

          (b) CEPH has no obligations, contractual or otherwise, that would
conflict with its entering into or performing its obligations under this
Agreement.

          (c) CEPH shall comply with all Applicable Laws relating to the
Products. CEPH has such permits, licenses and authorizations of governmental
authorities as are necessary to own its properties, conduct its business and
consummate the transactions contemplated hereby.

          (d) The ANDA for the Products and any other filings made with the FDA
or other Regulatory Authorities in connection with the Products were accurate,
complete and truthful when filed and made in good faith upon the best
information available to CEPH and its Affiliates at such time. The ANDA and all
other such Regulatory Filings have been, or shall be, amended, supplemented or
otherwise updated in a timely manner whenever the information contained in any
of them is no longer accurate, complete and truthful or as required by annual
reporting requirements, and CEPH shall promptly notify Advancis of any such
changes.

          (e) Any Products supplied by CEPH shall meet the Specifications, be in
conformity with the current version of the ANDA, cGMPs and all Applicable Laws,
rules and regulations (including Regulatory Approval for commercial sale in the
Territory) and not be adulterated or misbranded or an article which may not be
introduced into interstate commerce under the provisions of Section 404 of the
Act.

          (f) All Products supplied by CEPH hereunder shall be manufactured,
packaged, stored, tested and released at (i) the Plant, which is an FDA-approved
manufacturing facility, or (ii) with the prior written consent of Advancis in
each instance, another FDA-approved facility of CEPH.

          (g) No more than [***] of the total approved shelf life for each
presentation of the Products shall have expired at the time such Products are
shipped to Advancis. At the time of delivery to Advancis, the Products shall
have a minimum shelf life of [***].

          (h) The composition of the Products and the manufacturing and
packaging procedures used by CEPH in producing the Products shall be as stated
in the ANDA as approved by the FDA.

          (i) All Products supplied by CEPH hereunder shall be transferred to
Advancis free and clear of all liens, title claims, encumbrances, security
interests and other third party claims.

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AND EXCHANGE ACT OF 1934, AS AMENDED.

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          (j) Neither CEPH nor any of its Affiliates (i) is prohibited by any
Applicable Law from selling the Products or other pharmaceutical products within
the Territory or (ii) is listed by a United States federal agency as debarred,
suspended, proposed for debarment or otherwise ineligible for federal programs
in the United States or other jurisdictions within the Territory.

          (k) Neither the testing, development, manufacture, packaging,
distribution, storage, import, export, handle, transport, disposal, marketing,
sale or use of the Products in the Territory nor the performance of either
party’s obligations under this Agreement shall infringe any patents or other
intellectual property rights of third parties. CEPH represents that it has not
received any notice of any claimed infringement (including patent infringement)
in connection with the Products.

          (l) The extent that CEPH is required to comply with United States
federal or state law regarding equal opportunity, (i) CEPH has made a
commercially reasonable good faith effort to recruit, hire, train, promote and
retain persons of diverse backgrounds in its own labor force, and, at a minimum,
is in compliance with all affirmative action orders and regulations and decrees
applicable to it, and (ii) CEPH prohibits any form of unlawful discrimination in
the Plant and in other facilities where the manufacturing and delivery of the
Products occurs.

          (m) CEPH is a wholly-owned subsidiary of MOVA and MOVA consents to
CEPH’s entering into this Agreement. MOVA has indicated such consent by causing
the statement of consent on the Execution page hereof to be signed by its duly
authorized representative.

     7.2 Advancis Warranties. Advancis represents and warrants to CEPH as
follows:

          (a) Advancis has the full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.

          (b) Advancis has no obligations, contractual or otherwise, that would
conflict with its entering into or performing its obligations under this
Agreement.

          (c) Advancis has the right to use the KEFLEX brand in connection with
the Products in the Territory.

          (d) Any Products distributed, stored, imported, exported, handled,
transported, disposed of, marketed, sold or used by Advancis shall not be
adulterated or misbranded or an article which may not be introduced into
interstate commerce under the provisions of Section 404 of the Act.

     7.3 [***]

ARTICLE 8
INDEMNIFICATION

     8.1 By CEPH. CEPH shall indemnify, defend and hold harmless Advancis and
its Representatives from any and all third party claims, liabilities, losses,
injuries, damages, costs or

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AND EXCHANGE ACT OF 1934, AS AMENDED.

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expenses, including reasonable attorneys’ fees and expenses (collectively,
“Liabilities”), that may arise from or out of: (a) defects or alleged defects in
the Products; (b) product warranty obligations or services and any returned
Products; (c) any breach of CEPH’s representations, warranties, covenants or
agreements hereunder; (d) any claim, action or proceeding brought by any
Regulatory Authority or other governmental entity arising out of or resulting
from the failure by CEPH or any CEPH Representative to perform its obligations
under this Agreement, (e) the willful misconduct or negligence of CEPH or any
CEPH Representative in connection with this Agreement; (f) any bodily injury,
illness or death of any person caused or alleged to be caused by the use,
distribution or sale of the Products (except to the extent any such bodily
injury, illness or death is the result of a breach by Advancis of any of
Advancis’ representations, warranties, covenants or agreements hereunder);
(g) the enforcement by Advancis and the Advancis Representatives of their rights
under this Section 8.1; or (g) CEPH’s or any CEPH Representative’s violation of
any Applicable Law.

     8.2 By Advancis. Advancis shall indemnify, defend and hold harmless CEPH
and its Representatives from any and all Liabilities that may arise from or out
of: (a) any breach of Advancis’ representations, warranties, covenants or
agreements hereunder; (b) any claim, action or proceeding brought by any
Regulatory Authority or other governmental entity arising out of or resulting
from the failure by Advancis or any Advancis Representative to perform its
obligations under this Agreement, (c) the willful misconduct or negligence of
Advancis or any Advancis Representative in connection with this Agreement;
(d) the enforcement by CEPH and the CEPH Representatives of their rights under
this Section 8.2; or (e) Advancis’ or any Advancis Representative’s violation of
any Applicable Law; provided, that Advancis shall have no indemnification
obligation hereunder to the extent that (i) CEPH has any indemnification
obligations under Section 8.1 or (ii) the Liabilities result solely from the
performance of CEPH’s obligations under this Agreement.

     8.3 Claims. If any claim, action or proceeding of any kind alleging
Liability is instituted or threatened by a third party against either party to
this Agreement (the “Indemnified Party”) in respect of which indemnity is sought
against the other party (the “Indemnifying Party”) under this Article 8, the
Indemnified Party shall promptly notify the Indemnifying Party thereof in
writing; provided that any failure of the Indemnified Party to notify the
Indemnifying Party of such claim, action or proceeding shall relieve the
Indemnifying Party from its obligations under this Article 8 solely to the
extent that such delay in notification prejudices the Indemnifying Party’s
defense of such claim, action or proceeding. The Indemnifying Party shall have
the right to direct the defense of such action on behalf of the Indemnified
Party unless, in the opinion of counsel to the Indemnified Party, there may be
defenses available to the Indemnified Party which are unique to or different
from those available to the Indemnifying Party (in which case the Indemnifying
Party shall not have the right to direct the defense of such action on behalf of
the Indemnified Party). The Indemnified Party may participate in any such action
by counsel of its own choice, at its own expense. The Indemnified Party and its
Representatives shall, at the Indemnifying Party’s sole cost, provide the
Indemnifying Party with such assistance as the Indemnifying Party may reasonably
request in order to investigate and defend against any claim, action or
proceeding in respect of which indemnity is sought hereunder. The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party,

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which consent shall not be unreasonably withheld, settle or compromise any claim
or cause of action, or permit a default or consent to the entry of any judgment
in respect thereof, unless such settlement, compromise, or consent includes the
giving by the claimant to the Indemnified Party of an unconditional and
irrevocable release from all liability in respect of such claim. The
Indemnifying Party will not be liable hereunder for any settlement of any
Liability by the Indemnified Party without the Indemnifying Party’s prior
written consent, which consent shall not be unreasonably withheld.

     8.4 Injuries or Damages Suffered by CEPH Representatives. As an independent
contractor, any bodily injury or property damage suffered by CEPH or its
Representatives in the course of carrying out any duties under this Agreement
will be CEPH’s sole responsibility, except to the extent such bodily injury or
property damage is caused by Advancis’ negligence or willful misconduct. No
workers’ compensation insurance shall be obtained by Advancis concerning CEPH.
CEPH shall comply with workers’ compensation laws and shall provide a
certificate of workers’ compensation insurance, where applicable.

     8.5 Insurance. CEPH shall at all time during the Term maintain commercial
liability insurance covering its obligations under this Agreement, which
insurance shall afford limits of not less than [***] per occurrence for bodily
injury liability, property damage liability, contractual liability and completed
operations liability and not less than [***] per occurrence for products
liability, in each case with an insurance carrier qualified to do business in
the United States. CEPH shall promptly furnish to Advancis evidence of the
maintenance of the insurance required hereunder and shall name Advancis as an
“additional insured” under the general and products liability insurance
policies. In case any such policies are written on a “claims made” basis, such
policies shall remain in effect for a period of five years following the
expiration or earlier termination of this Agreement.

ARTICLE 9
CONFIDENTIALITY

     9.1 Confidentiality. Pursuant to the terms of this Agreement, each party
(in such capacity, the “Disclosing Party”) has disclosed and will disclose to
the other party and/or its Representatives (in such capacity, the “Receiving
Party”), certain Confidential Information of the Disclosing Party. The Receiving
Party shall not disclose the Confidential Information of the Disclosing Party to
any third party without the prior written consent of the Disclosing Party and
shall make no use of such Confidential Information except in the exercise of its
rights and the performance of its obligations set forth in this Agreement.
Confidential Information disclosed by the Disclosing Party shall remain the sole
and absolute property of the Disclosing Party, subject to the rights granted
herein.

     9.2 Compelled Disclosure. In the event the Receiving Party is required to
disclose Confidential Information of the Disclosing Party under Applicable Law,
to respond to an inquiry of a Regulatory Authority concerning the Products or in
a judicial, administrative or arbitration proceeding, then the Disclosing Party
shall (i) provide the Disclosing Party with as much advance notice as reasonably
practicable of the required disclosure, (ii) cooperate with the

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Disclosing Party in any attempt to prevent or limit the disclosure, and
(iii) limit any disclosure to the specific purpose at issue.

     9.3 Limitation. Nothing in this Article 9 shall be interpreted to limit the
ability of either CEPH or Advancis to disclose its own Confidential Information
to any other person on such terms and subject to such conditions as it deems
advisable or appropriate.

     9.4 Confidentiality of Agreement. Each of CEPH and Advancis acknowledge and
agree that the terms and conditions of this Agreement shall be considered
Confidential Information of each party and shall be treated accordingly.
Notwithstanding the foregoing, CEPH acknowledges and agrees that Advancis may be
required to disclose some or all of the information included in this Agreement
in order to comply with its obligations under the United States Securities Act
of 1933, the United States Securities Exchange Act of 1934, listing standards or
agreements of any national or international securities exchange or The NASDAQ
Stock Market or other similar laws of a governmental authority, and CEPH hereby
consents to such disclosure.

     9.5 Remedies. Each party specifically recognizes that any breach by it of
this Article 9 may cause irreparable injury to the other party, that actual
damages arising from such breach may be difficult to ascertain and that, in any
event, such actual damages may be inadequate to compensate the other party for
such breach. Accordingly, and without limiting the availability of legal or
equitable remedies under any other provisions of this Agreement, each party
agrees that in the event of any such breach the other party shall be entitled to
seek, by way of private litigation in the first instance, injunctive relief and
such other legal and equitable remedies as may be available.

     9.6 Survival. The obligations to maintain in confidence all Confidential
Information shall survive the termination or expiration of this Agreement for
any reason.

ARTICLE 10
TERM/TERMINATION

     10.1 Term. The term of this Agreement shall commence on the Effective Date,
shall continue for an initial period of five years (the “Initial Term”) and
shall automatically renew for additional one-year periods thereafter (each, a
“Renewal Term,” and, together with the Initial Term, the “Term”), unless either
party shall give notice of non-renewal to the other party at least [***] prior
to the end of the Initial Term or any Renewal Term (in which case the Term shall
expire at the end of the then-current Term) or unless sooner terminated in
accordance with the provisions of this Article 10.

     10.2 Termination. Either party shall have the right to terminate this
Agreement upon the occurrence of any of the following events by giving the other
party written notice identifying the reason for such termination:

          (a) A decree or order shall have been entered by a court of competent
jurisdiction adjudging the other party bankrupt or insolvent, or approving as
properly filed a

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AND EXCHANGE ACT OF 1934, AS AMENDED.

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petition seeking reorganization, readjustment, arrangement, composition or
similar relief for the other party under any bankruptcy law or any other similar
applicable statute, law or regulation, or a decree or order of a court of
competent jurisdiction shall have entered for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the other party
or a substantial part of its property, or for the winding up or liquidation of
its affairs;

          (b) The other party shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy petition
against it, or shall file a petition or answer or consent seeking
reorganization, readjustment, arrangement, composition, liquidation or similar
relief under any bankruptcy law or any other similar applicable statute, law or
regulation, or shall consent to the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of it or of a substantial part
of its property, or shall make an assignment for the benefit of creditors, or
shall be unable to pay its debts generally as they become due;

          (c) The other party commits a material breach of the terms of this
Agreement and such party, which shall use its best efforts to remedy such breach
as quickly as possible, fails remedy such breach within [***] after written
notice thereof is given to it by the non-breaching party;

          (d) The manufacture, use, sale or distribution of the Products is
enjoined permanently and unavoidably by a court or administrative agency of
competent jurisdiction as infringing the patent or other intellectual property
rights of any third party;

          (e) Such party reasonably determines, based on the written advice of
competent and reputable outside patent counsel that the manufacture, use, sale
or distribution of the Products unavoidably infringes the patent or other
intellectual property rights of any third party;

          (f) A Regulatory Authority shall have determined that the Products are
unmarketable; or

          (g) CEPH becomes subject to an FDA consent decree such that CEPH is
unable to manufacture the Products.

     10.3 Accrued Liabilities.

     (a) Except as provided in this Section 10.3, termination of this Agreement
for any reason shall not discharge either party’s liability for obligations
incurred hereunder and amounts unpaid at the time of such termination.

     (b) Upon termination of this Agreement for any reason, CEPH shall furnish
to Advancis complete inventory of all stock on hand of work-in-progress for the
manufacture of the Products. Unless otherwise agreed to between the parties, all
stock on hand as of the effective date of termination of this Agreement shall be
dealt with promptly as follows: (i) Products manufactured and packaged pursuant
to Purchase Orders from Advancis shall be delivered by CEPH to Advancis,
whereupon Advancis shall pay CEPH therefor in accordance with the terms

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TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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hereof; and (ii) work-in-progress commenced by CEPH against Purchase Orders from
Advancis shall be completed by CEPH and delivered to Advancis, whereupon
Advancis shall pay CEPH therefore in accordance with the terms hereof.

     (c) Upon termination of this Agreement by Advancis pursuant to
Section 10.2, if CEPH fails to comply with any termination and post-termination
obligations hereunder, Advancis shall have the right to cancel Purchase Orders
for Products made prior to termination and shall be relieved of its obligations
under Section 10.3(b). Also, upon termination of this Agreement by Advancis
pursuant to Section 10.2, CEPH shall bear the costs of disposal of Raw Materials
and API.

     (d) Upon termination of this Agreement by CEPH pursuant to Section 10.2,
Advancis shall reimburse for all Raw Materials (including API and printed
components) not necessary to complete 10.3(b) above but having been ordered or
purchased by CEPH in accordance with Advancis’ then current Forecast and for
which CEPH has no use in other production.

     10.4 Survival. The obligations of the parties under Article 1, 6, 7, 8, 9,
11 and Sections 3.2, 4.7, 4.8, 10.3, 10.4 shall survive any expiration or
termination of this Agreement.

ARTICLE 11
MISCELLANEOUS

     11.1 Notices. All notices or other formal communications hereunder (other
than routine business communications) shall be made either by hand, by certified
or registered letter, postage prepaid, return receipt requested, or by fax or
other electronic transmission or next business day delivery service directed to
the other party as provided below:

  (a)   If to Advancis:

General:
Steven A. Shallcross
Senior Vice President and Chief Financial Officer
Advancis Pharmaceutical Corporation
20425 Seneca Meadows Parkway
Germantown, MD 20876
Phone: [***]
Fax: [***]

Quality Assurance and Quality Control:
Head of Quality Assurance
Advancis Pharmaceutical Corporation
20425 Seneca Meadows Parkway
Germantown, MD 20876
Phone: [***]
Fax: [***]

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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With a copy to:
Howard S. Schwartz, Esq.
Piper Rudnick LLP
6225 Smith Avenue
Baltimore, Maryland 21209-3600
Phone: [***]
Fax: [***]

  (b)   If to CEPH:

CEPH International Corporation
P.O. Box 2970
Carolina, Puerto Rico 00984-2970
Attention: Verónica Viso, President

With a copy to:
Silvestre M. Miranda, Esq.
McConnell Valdes
270 Muñoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Facsimile: [***]

     Either party from time to time may change its address or fax number by
giving the other party notice as provided herein.

     11.2 Entire Agreement. This Agreement (including the Schedules) constitutes
the entire agreement between the parties relating to the subject matter hereof.
All prior agreements or arrangements, written or oral, between the parties
relating to the subject matter hereof are hereby canceled and superseded. This
Agreement may not be modified except in writing signed by both parties.

     11.3 Assignment. This Agreement, and all rights and obligations hereunder,
are personal as between the parties and shall not be assigned in whole or in
part by any of the parties to any other person or company without the prior
written consent of the other party, except to an Affiliate or by a party to the
successor to or the assignee of all or substantially all of its pharmaceutical
business. Advancis may, after written notice to CEPH, assign this Agreement to
any person or entity to which it has sold, licensed or otherwise transferred the
rights to market and sell the Product in the Territory and which has assumed all
of Advancis’ obligations hereunder provided that such assignment shall not
release Advancis of its obligations hereunder. Notwithstanding the aforesaid,
Advancis shall have no further obligations hereunder, except to the extent the
same have accrued prior to such assignment, if the assignee has, in the
reasonable judgment of CEPH, sufficient financial capability and regulatory
status to enable it to perform the obligations of Advancis hereunder. CEPH shall
provide Advancis with written notice of its release from the terms of this
Agreement, or of any reasonable objection CEPH may have to the assignee, within
[***] of Advancis’ notice to CEPH of such assignment. Any such consent shall not
be unreasonably withheld by CEPH. Except as provided herein, the terms and
conditions of

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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this Agreement shall be binding upon, and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

     11.4 Waiver of Default. No waiver of any default by either party shall be
deemed to constitute a waiver of any subsequent default with respect to the same
or any other provision hereof. No waiver shall be effective unless made in
writing with specific reference to the relevant provision(s) of this Agreement
and signed by a duly authorized representative of the party granting the waiver.

     11.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
conflict of laws principles.

     11.6 Force Majeure.

          (a) Neither party shall be liable to the other for default or delay in
the performance of any of its obligations under this Agreement if such default
or delay is caused directly or indirectly by accident, fire, flood, riot, war,
terrorism, act of God, embargo, strike, failure or delay of normal source of
supply of materials, or delay of carriers, equipment failure or complete or
partial shutdown of plant by any of the foregoing causes or other causes beyond
its reasonable control (a “Force Majeure Event”), provided (i) the Force Majeure
Event is not due to the fault or neglect of the defaulting or delaying party,
(ii) the defaulting or delaying party provides, within [***] of its occurrence,
notice to the other party stating the nature of the Force Majeure Event, its
anticipated duration and the action being taken to avoid or minimize its effect,
and (iii) the defaulting or delaying party uses commercially reasonable best
efforts to remedy its inability to perform with utmost dispatch. The suspension
of performance hereunder shall be of no greater scope and no longer duration
than is required by the Force Majeure Event.

          (b) In the event that CEPH defaults or delays in the performance of
any of its obligations under this Agreement due to a Force Majeure Event for a
period of [***], CEPH shall advise Advancis, within [***] after such [***], as
to whether it will be able to resume performance within the following [***]
period (i.e., [***] from the commencement of the default or delay). If CEPH
advises Advancis that it will not be able to resume performance within such time
period, Advancis shall have the right to terminate this Agreement effective upon
notice to CEPH. If CEPH timely advises Advancis that it will be able to resume
performance within such [***] period, CEPH shall promptly, but no later than
[***] following its advice, demonstrate to Advancis that it will be able to
resume performance within such one [***] period. Advancis shall determine, in
its reasonable discretion, whether CEPH has adequately demonstrated that that it
will be able to resume performance within such [***] period. If so, CEPH shall
have the opportunity to cure the applicable defaults or delays in performance
within such [***] period. If not, Advancis shall have the right to terminate
this Agreement, by giving notice to CEPH, which termination shall be effective
[***] after the commencement of the default or delay. For the purpose of this
Section 11.6(b), the term “day” shall mean calendar day.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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          (c) Notwithstanding anything in this Section 11.6, the party to whom
performance is owed but not rendered because of a Force Majeure Event shall,
after the passage of [***] after commencement of the default of delay, [***].

     11.7 Independent Contractors. The parties hereto expressly understand and
agree that their relationship shall be that of independent contractors in the
performance of each and every part of this Agreement. Nothing in this Agreement
shall constitute one party as an employee, agent, joint venture partner or
servant of another. Each party is solely responsible for all of its employees
and agents and its labor costs and expenses arising in connection therewith.

     11.8 Public Statements. CEPH and Advancis each agree not to disclose the
terms of this Agreement in any public statements, whether oral or written,
including but not limited to shareholder reports, communications with stock
market analysts, statements to other customers or prospective customers, press
releases or other communications with the media, or prospectuses, without the
other party’s prior written consent, which shall not be unreasonably withheld.
Notwithstanding the foregoing, each party may make any such disclosures without
the other party’s consent that are required by applicable law including filings
or disclosures required by or to the Securities and Exchange Commission (and any
other applicable securities exchanges). If possible, each party shall give the
other at least five (5) business days advance written notice of a disclosure
required by applicable law.

     11.9 Dispute Resolution. In the event of any dispute or disagreement
between the parties as to the interpretation of any provision of this Agreement
(or the performance of obligations hereunder), the matter, upon written request
of either party, shall first be referred to representatives of the parties for
decision, each party being represented by a senior executive officer who has no
direct operational responsibility for the matters contemplated by this
Agreement. Such representatives shall promptly meet in a good faith effort to
resolve the dispute. If the dispute cannot be resolved by such representatives
within thirty (30) days after its submission, the matter shall then be settled
by mandatory binding arbitration to be held in New York, NY under the commercial
rules of the American Arbitration Association.

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

     11.11 Remedies. The rights and remedies provided in this Agreement are
cumulative and not exclusive of each other or of any rights or remedies provided
by applicable law.

     11.12 Time is of the Essence. Time is of the essence for all provisions
hereof.

[Execution Page Follows]

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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Execution

     IN WITNESS WHEREOF, the parties have caused this Commercial Supply
Agreement to be executed as of the Effective Date.

              ADVANCIS PHARMACEUTICAL CORPORATION
 
       

  By:      /s/ Kevin S. Sly

     

--------------------------------------------------------------------------------

      Name: Kevin S. Sly

      Title: SVP & CBO
 
            CEPH INTERNATIONAL CORPORATION
 
       

  By:      /s/ Verónica Viso

     

--------------------------------------------------------------------------------

      Name: Verónica Viso

      Title: President

CONSENT TO AGREEMENT

MOVA Pharmaceutical Corporation (“MOVA”) hereby acknowledges that CEPH
International Corporation (“CEPH”) is a wholly-owned subsidiary of MOVA which
has been authorized by MOVA to enter into the foregoing Commercial Supply
Agreement with Advancis Pharmaceutical Corporation. MOVA hereby consents to
CEPH’s entry into the foregoing Commercial Supply Agreement and to the
performance of its obligations thereunder.

      MOVA PHARMACEUTICAL CORPORATION
By:
     /s/ Jack Van Hulst

 

--------------------------------------------------------------------------------

  Name: Jack Van Hulst

  Title:

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SCHEDULE A
Products

Keflex Branded Products

[***]

[***]

[***]

[***]

Generic Products

[***]

[***]

[***]

[***]

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TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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SCHEDULE B
Specifications
(to be included no later than 30 days from the Effective Date)

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SCHEDULE C
Labeling Specifications
(to be included no later than 30 days from the Effective Date)

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SCHEDULE D
Quality Agreement
(to be included no later than 30 days from the Effective Date)

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Schedule E

Prices for Finished Products

                      Product Type     Purchase Order Lot Size     Price    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    
[***]
    [***]     [***]    

There is an additional charge of [***] per lot for the [***].

*Figure represents amount of branded Products set aside from Purchase Orders of
generic Products.
CEPH has based the prices for Products on [***].

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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1. Price. CEPH will charge Advancis and Advancis will pay CEPH the above prices
per lot of Products, which prices are based on current Specifications and
include the costs of manufacture and bulk packaging of Products. [***].
Notwithstanding anything to the contrary herein, [***].

2. [***]

3. [***]

4. Price Changes due to changes in laws, regulations, cGMP’s, Specifications. In
the event that there are changes in laws or regulations, cGMP’s or the
Specifications in a manner that increases or decreases, in the aggregate, the
manufacturing cost on a per lot basis by more than [***] of the per unit price
to Advancis, [***]. CEPH, for itself and its Affiliates, shall keep and maintain
or cause to be maintained all documentation pertaining to any such changes in
laws or regulations, cGMP’s or the Specifications and shall provide to Advancis
adequate documentation in support of any resultant price changes.

5. Price Changes due to changes cost of materials. Beginning in the calendar
year beginning January 1, 2006, and on an annual basis thereafter, in the event
that there are changes in CEPH’s acquisition cost of Raw Materials (excluding
API) in a manner that increases or decreases, in the aggregate, the
manufacturing cost on a per lot basis by more than [***] of the per unit price
to Advancis, [***]. CEPH, for itself and its Affiliates, shall keep and maintain
or cause to be maintained all documentation pertaining to any such changes in
Raw Materials and shall provide to Advancis adequate documentation in support of
any resultant price changes.

6. Price Changes Due to Market Conditions. If cephalexin finished product market
conditions significantly change, the [***].

7. Amendment. Any agreed upon modification to the prices set forth above will be
set forth in a written amendment to this Agreement, signed by both parties.

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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Schedule F

Example Order Amounts for Products

                                  Grand Total                       Order Amount
(for                       Generic and                       KEFLEX branded    
Order Amount for     Order Amount for     Product Type     combined)     KEFLEX
branded     Generic    
[***]
    [***]     [***]     [***]    
 
                     
[***]
    [***]     [***]     [***]    
 
                     
[***]
    [***]     [***]     [***]    
 
                     
[***]
    [***]     [***]     [***]    
 
                     
[***]
    [***]     [***]     [***]    
 
                     
[***]
    [***]     [***]     [***]    
 
                     

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[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
AND EXCHANGE ACT OF 1934, AS AMENDED.

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