Exhibit 10.242

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

OPTION AND LICENSE AGREEMENT

THIS OPTION AND LICENSE AGREEMENT (the “Agreement”) is effective as of the 15th
day of December, 2006 (the “Effective Date”) by and among PHARMACO INVESTMENTS,
INC., a Delaware corporation having a place of business at 3151 South
Seventeenth Street, Wilmington, North Carolina 28412 (referred to hereinafter as
“PII”), a wholly owned subsidiary of Pharmaceutical Product Development, Inc., a
North Carolina corporation having its principal place of business at 3151 South
17th Street, Wilmington, NC 28412 (“PPD”), and RANBAXY LABORATORIES LTD., a
corporation incorporated, organized and operating under the laws of India and
having a place of business at Plot 90, Sector 32 Gurgaon 122001 (Haryana), India
(hereinafter “RBX”). PII and RBX are sometimes referred to herein individually
as a “Party” and collectively as the “Parties.” PPD is a Party to this Agreement
for the sole and limited purpose of agreeing to be bound by Section 12.19 of
this Agreement.

WITNESSETH THAT:

WHEREAS, RBX has performed research and development with respect to a [*]
identified as [*];

WHEREAS, PII wishes to enter into an agreement to obtain an exclusive option to
acquire an exclusive license to RBX Intellectual Property (as defined below) and
to develop and market therapeutic products incorporating the Compound made in
accordance therewith; and

WHEREAS, RBX is willing to grant such exclusive option to acquire an exclusive
license to PII under the terms and conditions set forth in this Agreement.

NOW, THEREFORE, PII and RBX hereby agree as follows:

ARTICLE I – DEFINITIONS

1.01. “AB Rated Product” means a product which has been approved by a Regulatory
Agency having an approved application that contains adequate scientific evidence
establishing, through in vitro and/or in vivo studies, the bioequivalence of
such product to a Licensed Product developed under this Agreement and which
product contains the same active pharmaceutical ingredient as such Licensed
Product.

1.02. “Affiliate” of a Party hereto shall mean any entity that controls, is
controlled by or is under common control with such Party. For purposes of this
definition, a Party shall be deemed to control another entity if it owns or
controls, directly or indirectly, at least fifty percent (50%) of the voting
equity of another entity (or other comparable ownership interest for an entity
other than a corporation) or if it has management control of the other entity.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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1.03. “API” means active pharmaceutical ingredient.

1.04. “Clinical Studies” means Phase I Clinical Studies, Phase II Clinical
Studies, Phase III Clinical Studies, and/or Post-Registration Studies.

1.05. “Combination Product” means any product in any dosage form that contains,
in addition to a Licensed Product, one or more other active ingredients having
significant prophylactic or therapeutic activity.

1.06. “Complete” or “Completion”, when used to describe a clinical study, shall
mean the date when all data and results of such study have been collected and
the final study report has been completed.

1.07. “Compound” means: (a) [*]; (b) any pharmaceutically acceptable salt of the
foregoing; (c) any active metabolite of the foregoing; (d) any isomer of the
foregoing; (e) any enantiomer of the foregoing; and (f) any prodrug of the
foregoing.

1.08. “Compound Know-How” means any Know-How, including Manufacturing Know-How,
that is Controlled by RBX and is necessary for the development of the Compound
or a Licensed Product.

1.09. “Confidential Information” shall have the meaning set forth in
Section 9.01.

1.10. “Controlled” means, with respect to any compound, material, information or
intellectual property right, that the Party owns or has a license to such
compound, material, information or intellectual property right and has the
ability to grant to the other Party access, a license or a sublicense (as
applicable under this Agreement) to such compound, material, information or
intellectual property right as provided for herein without violating the terms
of any agreement or other arrangements with any Third Party existing at the time
such Party would be first required hereunder to grant the other Party such
access, license or sublicense.

1.11. “CTM Product” means the Compound together with any formulation ingredients
in a finished pharmaceutical dosage form suitable for administration and dosing
to humans in Clinical Studies, but not in suitable form for commercial sale (for
example, without limitation, not in packaged form such as blister packs or other
containers and not including external packaging and package inserts).

1.12. “Develop” or “Development” means conducting in vitro and/or in vivo
pre-clinical investigations and Clinical Studies of the Compound (including the
manufacture of CTM Product and Drug Substance) and the Licensed Products
(including any placebo), and preparing, submitting and prosecuting all
applications to obtain Regulatory Approval of the Licensed Products for sale in
the Field in the Territory.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

2

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1.13. “Development Plan” means the initial plan to Develop the first Licensed
Product for the Indication, attached hereto as of the Effective Date as Schedule
1.13, as such Development Plan may be modified or updated in accordance with
Section 4.01.

1.14. “Diligent Efforts” means the carrying out by PII, its Affiliate,
sublicensee or Third Party Partner of obligations or tasks in a sustained and
continuous manner consistent with the efforts a reasonable Third Party, engaged
in the development and commercialization of pharmaceutical products for human
use, ordinarily devotes (including meeting the timelines for development and
commercialization) to a research, development or marketing project for a
pharmaceutical product or products of similar market potential, profit potential
or strategic value to that of the Compound based on conditions then prevailing.
Diligent Efforts includes without limitation, using commercially reasonable
efforts to sublicense the licenses granted under this Agreement to a Third Party
for the continued development, manufacture and commercialization of the Compound
and the Licensed Products. Notwithstanding the foregoing, the requirement to
exercise “Diligent Efforts” does not require that PII conduct Clinical Studies
or other Development studies relating to the Compound of the size and scope
previously conducted by Third Party pharmaceutical companies to obtain
Regulatory Approval of statin products for the Indication, except to the extent
PII is otherwise required to do so by the FDA. Without limiting the Parties’
rights under Section 12.18, the Parties understand and agree that delays
resulting from the occurrence of Force Majeure events or Interfering Events
shall not be grounds for RBX to claim a failure to use Diligent Efforts or that
a material breach of this Agreement has occurred; provided, however, that
(i) PII uses Diligent Efforts to avoid the occurrence of such delays, and
(ii) uses Diligent Efforts to reduce the impact of such delays following their
occurrence.

1.15. “Drug Substance” means the Compound suitable for administration and dosing
to a human.

1.16. “EMEA” means the European Medicine Agency.

1.17. “Enforceable Claim” means a claim included in an issued and unexpired
patent that has not been: (i) abandoned or disclaimed; or (ii) declared invalid
or unenforceable by a decision of a court or other governmental agency of
competent jurisdiction, which decision is unappealable or unappealed within the
time allowed for appeal.

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

1.19. “FD&C Act” means the United States Food, Drug and Cosmetic Act, as amended
and the rules and regulations of the FDA promulgated thereunder.

1.20. “Field” means all human uses.

1.21. “First Commercial Sale” means the first transaction following Regulatory
Approval of a Licensed Product in which PII, its Affiliate, sublicensee or Third
Party Partner transfers physical possession and title to such Licensed Product
to a Third Party in exchange for value and after which transfer the seller has
no right or power to determine the Third Party’s resale price. Transfer for
research, clinical development or testing only purposes shall not constitute the
First Commercial Sale.

 

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1.22. “Force Majeure” shall mean conditions or events that are beyond the
control of a Party or any Third Party vendors, sublicensee or Third Party
Partner of PII, including, without limitation, fire, flood, earthquake, storm,
war, acts of God, accident, voluntary or involuntary compliance with any
regulation, law or order of any government, civil commotion, labor strike or
lock-out, epidemic, failure or default of public utilities or common carriers,
explosion and/or any other cause or externally induced casualty beyond such
Party’s control; provided, however, that except as specifically provided above,
Force Majeure shall not include delays caused by the conduct of Third Party
vendors, sublicensees or a Third Party Partner of PII in the Development,
Regulatory Approval or commercialization of the Licensed Products, including,
without limitation, manufacturers of the Licensed Products.

 

1.23. “GAAP” means generally accepted accounting principles in the United
States, consistently applied.

1.24. “GMP” means the FDA’s then-current good manufacturing practices applicable
to the manufacture of pharmaceutical products for human use in the United
States, the FDA’s guidance documents, and all successor regulations and guidance
documents.

1.25. “IND” means Investigational New Drug Application submitted to the FDA in
conformance with applicable laws and regulations and the foreign equivalent of
such application in non-U.S. countries of the Territory.

1.26. “Indication” means dyslipidemia, including, without limitation,
hypercholesterolemia, hyperlipidemia or hypertriglyceridemia.

1.27. “Interfering Event” means (i) any decision ruling, directive,
instructions, position, guidance or other action, whether in writing or
otherwise of a Regulatory Agency, IRB or ethics committee, any change in a
Regulatory Agency, IRB or ethics committee approval processes or regulatory
requirements (including Clinical Study requirements) from those in effect on the
Effective Date, or any inaction on the part of a Regulatory Agency, IRB or
ethics committee, in each case that materially affects the requirements for, or
the timeline of, the Development and Regulatory Approval of the Licensed
Product(s) in the U.S. or other countries in which Regulatory Approval is being,
or is required to be, sought, (ii) a Licensed Product Manufacturing Failure, or
(iii) a determination by PPD, in the exercise of its reasonable discretion, that
data or other information obtained during the course of, or as a result of, any
Clinical Study for the Compound or Licensed Product(s) will have a material
adverse affect on the safety or efficacy of the Licensed Product(s) or require
that additional Development activities be conducted (exceeding that provided in
the then current Development Plan) for the Development and Regulatory Approval
of the Licensed Product(s).

 

1.28. “Joint Invention” shall have the meaning in Section 7.01.

 

1.29. “Joint Patents” shall have the meaning in Section 7.03.

 

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1.30. “Joint Patent Rights” shall have the meaning in Section 7.01.

1.31. “Know-How” means any unpatented or unpatentable inventions, information,
data, drawings, plans, specifications and designs relating to the Compound, a
CTM Product or a Licensed Product including, in particular, any marketing
information, preclinical, clinical, toxicology, analytical, regulatory, ADME
information and/or data. As used herein, “ADME” refers to absorption,
distribution, metabolism and excretion information and/or data of the Compound
or Licensed Product.

1.32. “Licensed Product” means any product: (i) which contains the Compound, or
any isomer, homolog, analog or prodrug of the Compound, or (ii) which, if made,
used or sold in the absence of the license granted by RBX to PII under this
Agreement, would infringe an Enforceable Claim of a RBX Patent or Joint Patent.

1.33. “Licensed Product Manufacturing Failure” means any failure, disruption,
delay or any other problem encountered by PII, its contract manufacturer or
Third Party Partner relating to the manufacture, formulation or production of
API, CTM Product or Licensed Product under the Development Plan.

1.34. “MAA” means Marketing Authorization Application submitted to the EMEA.

1.35. “Major Regulatory Filings” has the meaning provided in Section 4.03.

1.36. “Manufacturing Know-How” means any Know-How that is Controlled by RBX and
relates to the manufacture of the Compound or a Licensed Product including
processes and analytical methods therefore.

1.37. “NDA” means a New Drug Application, as defined in the FD&C Act and
applicable FDA rules and regulations, and the foreign equivalent of such
application in non-U.S. countries of the Territory.

1.38. “Net Sales” means the total gross sales (number of units shipped times the
invoice price per unit) of all Licensed Products by PII, its Affiliates,
sublicensees (including sublicensees of any sublicensee), Affiliates of
sublicensees and/or a Third Party Partner in the Territory to Third Parties,
less the following deductions to the extent actually paid or allowed:
(i) quantity discounts, cash discounts or chargebacks actually granted, allowed
or incurred in the ordinary course of business in connection with the sale of
Licensed Product; (ii) sales and excise taxes, customs and any other taxes, all
to the extent added to the sale price and paid by the selling party and not
refundable in accordance with applicable law (but not including taxes assessed
against the income derived from such sale); (iii) freight, insurance and other
transportation charges to the extent added to the sale price and set forth
separately as such in the total amount invoiced; (iv) reserves for amounts to be
repaid or credited by reason of rejections, defects, recalls or returns or
because of retroactive price reductions, chargebacks, rebates or commissions;
(v) rebates or allowances actually granted or allowed to group purchasing
organizations, managed health care organizations and to governments, including
their agencies, or to trade customers, in each case that are not Affiliates,
sublicensees or a Third Party Partner of PII; and (vi) allowances or credits

 

5

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to customers, not in excess of the selling price of Licensed Product, on account
of governmental requirements, rejection, outdating recalls or return of the
Licensed Product, made in accordance with GAAP and PII’s accounting policies.
Sales between PII and its Affiliates, sublicensees and a Third Party Partner of
PII shall not be treated as Net Sales hereunder. The calculation of Net Sales
shall be made in accordance with GAAP and PPD’s accounting policies.

1.39. “Option” shall have the meaning provided in Section 2.01 hereof.

1.40. “Option Period” shall have the meaning provided in Section 2.02 hereof.

1.41. “Option Termination Date” shall mean April 1, 2007.

1.42. “Partnering Agreement” means an executed and in-force written agreement
between PII and a Third Party, wherein such Third Party is granted the right to
develop (if applicable) and commercialize, alone or in collaboration with PII, a
human therapeutic product that comprises the Compound. For clarity, an agreement
in which PII engages a Third Party to perform, on behalf of PII, certain
obligations of PII under the Development Plan is not a Partnering Agreement.

1.43. “Patent” means (i) unexpired letters patents (including inventor’s
certificates) of which not all claims have been held invalid or unenforceable by
a court of competent jurisdiction from which no appeal can be taken or has been
taken within the required time period, including without limitation any
substitution, extension, registration, confirmation, reissue, re-examination,
renewal or any like filing thereof and (ii) pending applications for letters
patent, including without limitation any continuation, division or
continuation-in-part thereof and any provisional applications.

1.44. “Phase I Clinical Study” means that portion of the Development program
that generally provides for the first introduction into humans of the Compound
with the primary purpose of determining safety, metabolism and pharmacokinetic
properties and clinical pharmacology of the CTM Product in healthy patients, and
generally consistent with 21 CFR §312.21(a), or its foreign equivalent in
non-U.S. countries of the Territory. A Phase I Clinical Study can comprise a
Phase Ia clinical study and a Phase Ib clinical study. A Phase Ia clinical study
is a study performed in healthy humans. A Phase Ib clinical study is a study
performed in human patients.

1.45. “Phase II Clinical Study” means a clinical trial of the Compound on
patients, including possibly pharmacokinetics and dose ranging studies, the
principal purposes of which are to make a preliminary determination that the
Compound is safe for its intended use and to obtain sufficient information about
the Compound’s efficacy to permit the design of further clinical trials, and
generally consistent with 21 CFR §312.21(b), or its foreign equivalent in
non-U.S. countries of the Territory. A Phase II Clinical Study can comprise a
Phase IIa clinical study and a Phase IIb clinical study.

1.46. “Phase III Clinical Study” means a clinical trial involving administration
of the Compound to sufficient numbers of human patients with the goal of
establishing that the Compound is safe and efficacious for its intended use, to
define warnings, precautions and

 

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adverse reactions that are associated with the drug or label expansion of the
Compound, and to be considered as a pivotal study for submission of an NDA; and
generally consistent with 21 CFR §312.21(b), or its foreign equivalent in
non-U.S. countries of the Territory. A Phase III Clinical Study can comprise a
Phase IIIa clinical study and a Phase IIIIb clinical study. A Phase IIIb
clinical study is performed to further define findings found in a Phase IIIa
clinical study.

1.47. “Post-Registration Studies” means Clinical Studies which are conducted in
a particular country after the attainment of Regulatory Approval from the
appropriate Regulatory Agency in that country, which studies are conducted for a
variety of purposes including, but not limited to, post-marketing surveillance
and/or other studies intended to confirm or enhance the commercial profile of
the particular Licensed Product.

1.48. “PII Information” means information, results and data of any type
whatsoever, in any tangible or intangible form whatsoever, including without
limitation, databases, inventions, practices, methods, techniques,
specifications, formulations, formulae, knowledge, know-how, skill, experience,
test data including pharmacological, biological, chemical, biochemical,
toxicological and clinical test data, analytical and quality control data,
stability data, studies and procedures, and patent and other legal information
or descriptions produced by PII in the course of developing a Licensed Product,
including PII Compound Information.

1.49. “PII Patents” shall have the meaning set forth in Section 7.03(b).

1.50. “PII Compound Information” means the data and results generated from the
pre-clinical and clinical investigation and Development, and Clinical Studies
and testing of the Compound and/or the Licensed Products during the term of this
Agreement in the course of the Development Plan or related work on the Compound
or Licensed Products by PII or on behalf of PII, its Affiliates, sublicensees
and/or a Third Party Partner.

1.51. “Regulatory Agency” means the FDA or an equivalent non-U.S. regulatory
agency.

1.52. “RBX Intellectual Property” means (i) the Compound Know-How, including,
without limitation, Manufacturing Know-How, (ii) RBX Patents, and (iii) RBX’s
portion of Joint Patent Rights.

1.53. “RBX Patents” means all Patents that are owned or Controlled by RBX or its
Affiliates during the term of this Agreement and that claim the Compounds or any
Licensed Products or the Development, manufacture, intermediates made during the
manufacture thereof, purification, use or formulation thereof. RBX Patents
include without limitation patents that claim RBX Intellectual Property. RBX
Patents as of the Effective Date are listed in Schedule 1.53.

1.54. “Regulatory Approval” means the product license or marketing approval
necessary as a prerequisite for marketing a Licensed Product in a particular
country in the Territory, including, where applicable, pricing and reimbursement
approval.

1.55. “Regulatory Documentation” means all regulatory filings and supporting
documents created, submitted to a Regulatory Agency (including any
supra-national agency such as in the

 

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European Union) relating to a Licensed Product, and all data contained therein,
including, without limitation, the contents of any IND(s), NDA(s), Drug Master
File (“DMF”), correspondence to and from the Regulatory Agency or governmental
authority outside of the United States, minutes from meetings (whether in person
or by audioconference or videoconference) with regulatory authorities,
registrations and licenses, regulatory drug lists, advertising and promotion
documents shared with regulatory authorities, adverse event files, complaint
files and manufacturing records.

1.56. “Territory” shall mean all countries of the world.

1.57. “Third Party” means any person or entity other than PII or RBX, or an
Affiliate of PII or RBX.

1.58. “Third Party Partner” means a Third Party that has entered into a
Partnering Agreement.

ARTICLE II – OPTION TO LICENSE

2.01 License Option. In consideration for the payment by PII to RBX of the sum
of [*] pursuant to the terms of a certain Letter Agreement between the Parties
dated August 2, 2006, the covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which is
acknowledged by RBX, subject to and upon the terms and conditions of this
Agreement, RBX hereby grants to PII an exclusive option to acquire an exclusive,
royalty bearing license and sublicense rights to the RBX Intellectual Property
in the Field in the Territory, all as set forth in Article I and Articles III
through XII of this Agreement (the “Option”).

2.02 Term of the Option. The term of the Option shall commence on the Effective
Date and shall expires at 5:00 pm Eastern Standard Time on the Option
Termination Date (the “Option Period”).

2.03 Exercise of Option. PII may exercise the Option during the Option Period by
delivering written notice to RBX of PII’s exercise of the Option on or before
the expiration of the Option Period. The date on which such notice is given in
accordance with Section 12.08 shall be the “Option Exercise Date” for purposes
of this Agreement. If PII does not exercise the Option on or before the
expiration of the Option Period, each of the Option and this Agreement shall
terminate and be of no further force and effect.

2.04 Option Covenants. Between the Effective Date and the earlier to occur of
(i) the Option Exercise Date, and (ii) the Option Termination Date, RBX
covenants that (a) it will take all reasonably necessary action to protect and
maintain all right, title and interest in RBX Intellectual Property existing as
of the Effective Date, and (b) it will not grant, sell, assign, transfer, covey,
option, license, sublicense, pledge or otherwise dispose of all or any part of
the RBX Intellectual Property, or any rights thereto, to a Third Party, or enter
into any agreement, arrangement, understanding or discussions with a Third Party
with respect thereto.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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2.05 License Terms. Upon the timely exercise by PII of the Option in accordance
with Section 2.03, effective immediately on the Option Exercise Date and without
any further action or consent by RBX or PII, the provisions set forth in Article
I and Articles III – XII of this Agreement shall constitute the terms and
conditions of the license and sublicense rights granted by RBX to PII with
respect to the RBX Intellectual Property in the Territory and in the Field
related to Compound and Licensed Products.

ARTICLE III – LICENSES AND EXCLUSIVITY

3.01 License to RBX Intellectual Property. Effective as of the Option Exercise
Date, subject to and upon the terms and conditions set forth herein, RBX hereby
grants PII an exclusive, royalty bearing license (with the right to sublicense
as provided in Section 3.02) to RBX Intellectual Property to Develop, make, have
made, use, offer for sale, sell and import the Compound and the Licensed
Products in the Territory and the Field.

3.02 Right to Sublicense. With respect to the licenses granted to PII in
Section 3.01 above, such licenses shall include the right of PII to sublicense
all or any part of such licenses to a Third Party, provided however, that
(i) such sublicense is consistent with the terms of this Agreement, and (ii) PII
shall provide prior written notice to RBX of the proposed sublicense. For
clarification, PII has no obligation to obtain RBX’s consent to sublicense.
Notwithstanding any sublicense by PII of its rights under Section 3.01 or
elsewhere in this Agreement, PII shall remain the primary obligor for the
completion of the Development of the Compound and Licensed Products, the
commercialization of the Licensed Products and all other obligations, including
payment obligations, under this Agreement and shall be responsible for any
breach or failure to comply by any sublicensee or Third Party Partner of any of
the obligations of PII provided in this Agreement.

3.03 Exclusivity. Except as set forth in Section 3.04, during the term of this
Agreement, RBX and its Affiliates will not, directly or indirectly through or
with an Affiliate, Third Party or otherwise, (i) make, use, sell or import the
Compound or (ii) conduct, sponsor, fund, underwrite, initiate or otherwise
participate in any development or commercialization activities (or grant any
rights to Third Parties to do so) with respect to the Compound in the Field.

3.04 RBX Co-Marketing Rights.

(a) RBX reserves for itself and its Affiliates the non-exclusive right to
co-market the Licensed Product(s) (i) at any time in India, and (ii) as an AB
Rated Product in any country in the Territory following the sale of an AB Rated
Product by a Third Party in such country. Ranbaxy may contract with Third
Parties for the distribution of the Licensed Products pursuant to the exercise
of the co-marketing rights provided herein. As used herein, RBX’s right to
“co-market” means the right for RBX (either itself or through its Affiliates or
a Third Party) to manufacture, sell, distribute, promote and market Licensed
Products under trademarks, tradenames, service marks, designs or names or other
trade dress which are different from, and which are not confusingly similar to,
any trademarks, tradenames, service marks, designs or names (including without
limitation domain names), graphics or trade dress (including without limitation
product packaging and tablet characteristics) used by PII, any PII Affiliate,
any

 

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sublicensee or Third Party Partner of PII in connection with such Licensed
Product. RBX agrees not to reproduce or use any text or copyrighted work
covering the Licensed Product without PII’s prior written consent.

(b) If RBX decides to exercise its co-marketing rights provided in
Section 3.04(a) [*]. At the time RBX decides to exercise its co-marketing
rights, RBX may send to PII a written request to discuss the possibility of RBX
[*]. Upon RBX’s reasonable determination that a Third Party is expected to
launch within six (6) months an AB Rated Product in a country of the Territory,
RBX may at such time request [*] launch of its co-marketed product in such
country upon exercise of its co-marketing right as set forth in subsection
(a) of this Section 3.04.

ARTICLE IV –CONDUCT OF PROJECT; DEVELOPMENT; MARKETING

4.01 General Principle. During the term of this Agreement, as between PII and
RBX, PII shall be solely responsible for the Development of the Compound and the
Licensed Product(s), including, without limitation, the conduct of the
Development Plan for the Compound and the Licensed Product(s), and such other
development activities in accordance with the Development Plan, and for the
marketing, manufacture and commercialization of the Compound and the Licensed
Product(s) in the Territory consistent with its obligations under this
Agreement. PII will use Diligent Efforts to Develop and commercialize the
Compound and at least one (1) Licensed Product for the Indication. PII shall
have responsibility for, and shall exercise Diligent Efforts in, obtaining
necessary Regulatory Approvals, and PII or its Affiliates, sublicensees or Third
Party Partner, shall hold legal title of any [*] for the Licensed Product(s) and
shall have responsibility for all the Development, manufacture and marketing
activities pursuant to and in support of such applications. RBX acknowledges
that the Development Plan is an initial plan and may change as a result of data
obtained during the execution of the Development Plan, changes to Regulatory
Agency guidelines and requirements and prevailing conditions in the marketplace
for the Licensed Product. PII shall have the right to modify the Development
Plan in its sole and absolute discretion, but shall use Diligent Efforts to
advance the Development and commercialization of the Compound and the Licensed
Product.

4.02 Development Reports.

(a) Quarterly Development Reports. PII shall furnish to the alliance manager as
may be designated from time to time by RBX (the “Alliance Manager”) a quarterly
written report detailing the progress of the Development, including successes,
difficulties, milestone achievements and a comparison of the status of the
Development as compared to the Development timeline contained in the Development
Plan, including (i) a description of the status of the preparation, filing and
receipt of Regulatory Approvals relating for the Licensed Product(s) in the
Territory, (ii) any updates or modifications to the Development Plan, and
(iii) the estimated date of the First Commercial Sale of the Licensed Products
in each country of the Territory in which PII has submitted agency applications
for Regulatory Approval of the Licensed Product(s). Such reports shall
constitute Confidential Information under Article IX and RBX will limit
disclosure to its employees on a strict need-to-know basis. The first quarterly
report shall be provided to RBX on April 1, 2007 and on the first day of each
July, October, January and April thereafter.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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(b) Record Keeping. PII shall maintain written records of all research and
development activities under the Development Plan, such records shall be
complete and accurate and shall fully and properly reflect all work done and
results achieved in the execution of the Development Plan in sufficient detail
and in good scientific manner appropriate for patent and regulatory drug
development and approval purposes. RBX shall have the right to review such
records annually to the extent necessary for RBX to determine that PII is
fulfilling its obligations under the Agreement. The Parties acknowledge and
agree that all information in such records shall be subject to the
confidentiality obligations of Article IX hereof.

4.03 Development; Regulatory Activities and Approvals.

(a) PII shall use Diligent Efforts and be responsible for the conduct of the
Development of the Compound and the Licensed Product(s) within the Territory in
order to obtain and maintain Regulatory Approval of a [*] (“Major Regulatory
Filings”) for a Licensed Product for the Indication as promptly as practicable.
In executing the Development Plan, PII shall be solely responsible for all costs
and expenses relating to the Development Plan and obtaining Regulatory Approval
for the Licensed Product(s). Without limiting the generality of the foregoing,
PII shall be responsible for the preparation, filing and prosecution of all
agency applications for obtaining Regulatory Approvals in the Territory which
are required to commercially sell or use the Licensed Product(s) in the
Territory and for all subsequent related submissions. All Regulatory
Documentation and Regulatory Approvals in the Territory shall be owned and filed
in the name of PII. PII shall use Diligent Efforts in preparing the Major
Regulatory Filings for Regulatory Approval of the Licensed Product(s) and in
causing such agency applications to progress through the Regulatory Approval
process. PII shall use Diligent Efforts for the preparation and submission of
all governmental and agency applications for Regulatory Approval for a Licensed
Product for the Indication in countries of the Territory other than [*] (which
are addressed separately above) in which PII determines to submit agency
applications, and the receipt of such Regulatory Approvals, including, without
limitation, pricing and reimbursement approval, where applicable.

(b) If PII receives a written communication from a Regulatory Agency, either
directly or through a sublicensee or a Third Party Partner of PII, relating to
the Compound or the Licensed Product(s) which relate to the Development,
marketing, safety or efficacy of the Compound or the Licensed Products, and
which would materially affect the time for receipt of Regulatory Approval of
such Licensed Product(s) or the ability of PII to Develop or market such
Licensed Product(s), PII shall promptly provide RBX’s Alliance Manager (as
provided in Section 4.02(a)) with a summary of such information. Such summary
shall be subject to the confidentiality obligations of Article IX hereof.

4.04 Launch and Marketing.

(a) PII, at is sole cost and expense, shall use Diligent Efforts to complete the
First Commercial Sale of a Licensed Product in [*] as soon as practicable after
Regulatory Approval has been obtained for such Licensed Product, and thereafter
shall use Diligent Efforts to manufacture, promote, distribute, market,
advertise and sell the Licensed Product (or cause the manufacture, promotion,
distribution, marketing, advertisement and sale of the Licensed

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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Product) to the extent reasonable in light of the market and potential market
for the Licensed Product and in a manner consistent with which a Third Party
engaged in the commercialization of pharmaceutical products for human use
ordinarily devotes to marketing for a pharmaceutical product having similar
market potential, profit potential or strategic value to that of the Licensed
Product in a particular country of the Territory. For the sake of clarity, RBX
acknowledges and agrees that, based on market conditions, including pricing
conditions and environment, then existing in [*], PII may delay or elect not to
manufacture, promote, distribute, market, advertise or sell the Licensed Product
in any such Country. Without limiting the foregoing, not later than 30 days
following the end of each calendar year following the First Commercial Sale of
any Licensed Product, PII shall provide to RBX a written report summarizing
PII’s (or its Third Party Partner’s) marketing efforts relating to the Licensed
Product during such annual period.

(b) Restrictive Covenant. Neither PII nor any of its Affiliates shall develop,
license, acquire, file for Regulatory Approval, market, promote, sell or
distribute [*] other than the Compound and the Licensed Product(s) hereunder, or
[*] other than the Compound and the Licensed Product(s) hereunder in combination
with another active ingredient in any country of the Territory during the term
of this Agreement, except that PII and any of its Affiliates may provide
services to Third Parties in connection with the preclinical and clinical
development or post-marketing studies of one or more [*], provided that (i) such
services are limited to those that are usual and customary for clinical research
organizations in general, and PII and its Affiliates in particular; and (ii) PII
and its Affiliates shall not retain (1) any right, title, interest or license in
any such [*]; or (2) any right to receive (directly or indirectly) any
consideration in connection with the subsequent development, regulatory filings,
regulatory approval, promotion or sales of such [*] (other than normal and
customary fees and expenses charged by PII and its Affiliates for any such
services).

4.05 Transfer of Know-How.

(a) To facilitate PII’s accomplishment of the responsibilities set forth in this
Article IV, RBX shall supply PII with copies of all documents pertinent to the
Development of the Compound which are in the possession of RBX or its Affiliates
as of the Effective Date including but not limited to those documents listed in
Schedule 4.05. RBX shall use reasonable commercial efforts to provide such
documents to PII within forty-five (45) days of the Option Exercise Date. RBX
will provide PII with all relevant information available and known to RBX
concerning the safety, handling, use, disposal and environmental effects of
Compound or as may be useful to PII to conduct the Development Plan, including
but not limited to any communications with regulatory agencies. The Parties
acknowledge and agree that all such Compound-related information, including,
without limitation, the Manufacturing Know-How, shall be subject to the
confidentiality obligations of Article IX hereof.

(b) Within ten (10) days of the Option Exercise Date, RBX shall make available
for shipping, [*] totaling approximately [*] and [*] that are in RBX’s
possession as of the Effective Date (“RBX [*]”). PII shall pay to RBX the amount
of [*] dollars ($[*]), within thirty (30) days of an invoice for the same. PII
acknowledges and agrees that RBX is providing the RBX [*] on an “as is” basis,
free of any representation or warranty, including, without limitation, the
warranties of merchantability or fitness for any particular purpose.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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4.06 Manufacturing. PII shall be solely responsible for (i) the manufacture of
CTM Product and Drug Substance as may be required to obtain Regulatory Approval
of the Licensed Product(s) in the Territory and (ii) the manufacture of
commercial requirements of the Licensed Product(s) for marketing and sale in the
Territory.

 

4.07 [*].

ARTICLE V – FEES AND ROYALTIES

5.01 License Fee. PII shall, simultaneous with the provision of written notice
to RBX exercising the Option on the Option Exercise Date, pay to RBX a one-time
non-refundable, non-creditable license fee in the amount of two hundred fifty
thousand dollars ($250,000) (the “License Fee”).

5.02 Clinical Milestone Payments. In addition to paying the License Fee, and
without limiting Section 5.02(d) below, PII shall pay RBX the following
non-refundable, non-creditable additional amounts upon the first occurrence of
the applicable event (individually a “Milestone Payment” and collectively the
“Milestone Payments”):

(a) Completion of [*]. PII will notify RBX in writing upon the Completion of the
[*] in any country of the Territory to be performed in the Development Plan
involving CTM Product within fourteen (14) days of such Completion. Within
thirty (30) days of the Completion thereof, PII will pay RBX a one-time
milestone payment of [*]. For clarity, if [*] are contemplated in the
Development Plan, then Completion of the [*] shall occur upon the Completion of
the [*]. In the event multiple arms of such [*] are performed using different
comparitors and/or patient populations, the Milestone Payment under this
Section 5.02(a) shall be triggered upon the Completion of the last arm of such
[*] (expressly excluding any requirement to complete any [*]) relating to such
[*].

(b) Completion of [*]. PII will notify RBX in writing upon Completion of the [*]
in any country in the Territory to be performed in the Development Plan
involving a CTM Product within fourteen (14) days of such Completion. Within
thirty (30) days of the Completion thereof, PII will pay RBX a one-time
milestone payment of [*]. For clarity, if [*] are contemplated in the
Development Plan, then Completion of the [*] shall occur upon the Completion of
the [*]. In the event multiple arms of such [*] are performed using different
comparitors and/or patient populations, the Milestone Payment under this
Section 5.02(b) shall be triggered upon the Completion of [*] relating to such
[*] (expressly excluding any requirement to complete any [*]).

(c) Completion of [*]. PII will notify RBX in writing upon Completion of the [*]
in any country in the Territory to be performed in the Development Plan
involving a CTM Product within fourteen (14) days of such Completion. Within
thirty (30) days of the Completion thereof, PII will pay RBX a one-time
milestone payment of [*]. For clarity, if [*] are

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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contemplated in the Development Plan, then Completion of the [*] shall occur
upon the Completion of the [*]. In the event multiple arms of a [*] are
performed using different comparitors and/or patient populations, the Milestone
Payment under this Section 5.02(c) shall be triggered upon the Completion of [*]
relating to such [*] (expressly excluding any requirement to complete any [*]).

(d) Completion of Payments. Subject to this Section 5.02(d), PII shall only be
obligated to pay the Milestone Payments under Section 5.02(a), 5.02(b) and
5.02(c) once. For clarity, except as expressly provided below, once PII makes
the Milestone Payment under either Section 5.02(a), 5.02(b) or 5.02(c) relating
to the Development Plan, PII shall have no further obligation to make any
further Milestone Payments under Section 5.02(a), 5.02(b) or 5.02(c) to RBX for
any future occurrence of such milestone event relating to another program for
the Development of the Compound for the Indication. In the event that PII
pursues the Development of the Compound to treat an indication that is [*]
(other than [*]), PII shall pay RBX the milestone payments set forth in Sections
5.02(a)-(c) upon the occurrence of the milestone event with respect to the
Development of such Compound for such [*] indication. Notwithstanding the
foregoing or anything to the contrary contained in this Agreement, in the event
PII pursues the Development of the Compound (whether in a single or combination
product) for the treatment of [*], the Parties shall negotiate in good faith the
separate and additional milestone payments to be made by PII to RBX pursuant to
such Development program; provided, however, that such separate and additional
milestone payments must exceed those provided in this Section 5.02 in the
aggregate.

5.03 Sales Milestones. PII shall pay to RBX sales milestone payments in
accordance with the schedule set forth below with regard to the Licensed
Products, based on total worldwide Net Sales of the Licensed Products for the
first consecutive twelve month period during which such sales milestone event is
achieved, such payment to be made within thirty (30) days after achievement of
such milestone event. Each of the milestone payments listed in this Section 5.03
shall be payable only once under this Agreement regardless of the number of
Licensed Products that individually achieve the sales milestone event in a given
12-month period or the number of times the Licensed Products achieve such sales
milestone event in a given 12-month period.

 

Sales Milestone Event

  

Sales Milestone Payment

First time that aggregate worldwide Net Sales of all Licensed Products in the
aggregate in a twelve consecutive month period exceed [*]

   [*]

First time that aggregate worldwide Net Sales of all Licensed Products in the
aggregate in a twelve consecutive month period exceed [*]

   [*]

First time that aggregate worldwide Net Sales of all Licensed Products in the
aggregate in a twelve consecutive month period exceed [*]

   [*]

First time that aggregate worldwide Net Sales of all Licensed Products in the
aggregate in a twelve consecutive month period exceed [*]

   [*]

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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5.04 Royalties. Subject to the terms and conditions of this Agreement, PII shall
pay to RBX a royalty in the amount of [*] percent ([*]%) of Net Sales of each
Licensed Product in the Territory commencing with the First Commercial Sale of
the first Licensed Product.

5.05 Royalty Period. PII’s obligation to pay royalties to RBX under Section 5.04
shall apply on a Licensed Product-by-Licensed Product basis and shall begin, on
a country by country basis, upon the date of the First Commercial Sale in such
country of such Licensed Product and shall end upon termination of sale of the
Licensed Product in such country.

5.06 Payments to Third Parties. In the event PPD determines that it is necessary
or desirable to seek a license or immunity from suit from any Third Party in
order for PPD to exercise its rights hereunder to Develop, manufacture,
commercialize, use or exploit the Compound or a Licensed Product in a particular
country of the Territory, PPD shall obtain any such license or immunity from
suit. Any upfront payment, milestone, royalty or other payment paid or payable
by PPD to a Third Party in consideration for immunity from or license to such
Third Party’s intellectual property rights with respect to the Compound or a
Licensed Product shall be solely for PPD’s account and RBX shall have no
liability (including, without limitation, any indemnity obligation) for any such
amounts.

5.07 Method of Calculation. The calculation of the amount of royalties due under
the provisions of Section 5.04 shall be subject to and computed in accordance
with the following provisions:

(a) Frequency. Royalties shall be calculated and paid on a calendar quarter
basis. PII shall provide RBX with a statement of royalties owed to RBX within
thirty (30) days after the end of each calendar quarter and the quarterly
royalty payment shall be made at the time of such statement. Each of the
quarterly statement of royalties and the annual statement provided in the
following sentence shall show in reasonably specific detail, on a
country-by-country basis (i) the total number of units of each of the Licensed
Products sold, (ii) the Net Sales on a Licensed Product-by-Licensed Product
basis (including the detailed calculation of the deductions from gross sales of
each of the Licensed Products in arriving at Net Sales); (iii) the calculation
of the royalties payable pursuant to Section 5.04 in United States dollars which
had been accrued hereunder based upon Net Sales of each Licensed Product,
including a detailed calculation showing the application of the applicable
royalty rates under Section 5.04 to the aggregate Net Sales for all Licensed
Products; (iv) the withholding taxes, if any, required by law to be deducted
with respect to such royalties and the amounts paid to the appropriate
governmental authority with respect to such royalties; (v) the date of the first
Commercial Sale of each Licensed Product in each country in the Territory during
the reporting period; and (vi) the exchange rates used in determining the amount
of United States dollars. In addition, at the end of each calendar year,
aggregate royalties for such calendar year shall be calculated on aggregate Net
Sales for all Licensed Products for such calendar year to determine additional
royalty payments owed to RBX by PII. Within sixty (60) days after the end of
each calendar year, PII shall provide RBX with a statement of such additional
aggregate royalty payments owed to RBX and a written report showing the method
by which the royalty payments for such calendar year were calculated, including
a breakdown of gross sales and Net Sales for each Licensed Product sold,
including any exchange rates used. If there are no sales of Licensed Product in
a country in a given year,

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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then no statement for such country shall be included in such yearly report. PII
shall submit any additional aggregate royalty payments to RBX together with such
statement and written report. With respect to sales of any Licensed Products
invoiced in United States dollars, the Net Sales and royalties and other
payments payable hereunder shall be expressed in United States Dollars. With
respect to sales of any Licensed Products invoiced in a currency other than
United States Dollars, the Net Sales and royalties and other payments payable
hereunder with respect to such Licensed Products shall be expressed in the
domestic currency of the party making the sale together with the United States
dollar equivalent of the royalty payment payable, and such exchange rate shall
be calculated pursuant to Section 6.03.

(b) Combination Products. PII shall pay RBX royalties on Net Sales of any
Combination Product. For the purpose of calculating royalties on Net Sales of
Combination Products hereunder, Net Sales of a Combination Product shall be
determined on a country by country basis by multiplying the actual Net Sales of
the Combination Product by the fraction A/(A+B), where A is the average sale
price of a Licensed Product in a given country when sold separately in finished
form and B is the average sale price of the other product(s) comprising the
active ingredients other than the Compound sold separately in finished form in
that given country. With respect to Net Sales of Combination Products outside of
the United States, where available in a given country, the most recent reference
price(s) or government-regulated price(s) for the other product(s) in the given
country will be used as the average sale price. In the event that such average
sale price cannot be determined for either the Licensed Product or other
product(s) in the Combination Product, Net Sales for purposes of determining
royalty payments hereunder shall be calculated by multiplying the Net Sales of
the Combination Product by the fraction C/(C+D), where C is PII’s, or its
Affiliates’, sublicensees’ or Third Party Partner’s cost of goods of the
Licensed Product and D is PII’s, or its Affiliates’, sublicensees’ or Third
Party Partner’s cost of goods of the other product(s), in each case determined
in accordance with GAAP.

(c) Royalty and Patents. Regardless of the number of patents that cover a
Licensed Product, only one royalty shall be payable upon sale of a Licensed
Product.

(d) Other Consideration. In the case of a sale or other disposal of Licensed
Product for value other than in an arm’s-length transaction exclusively for
money, such as barter or counter-trade, the amount of such sale shall be
calculated using the fair market value of such Licensed Product (if higher than
the stated sales price) in the country of disposition.

ARTICLE VI – Royalty Records, Verification and Payment

6.01 Books and Records. PII shall keep and shall require any Affiliates,
sublicensees and Third Party Partner selling any Licensed Product to keep proper
records and books of account, in accordance with GAAP, showing the Net Sales of
each Licensed Product upon which the royalty payments and Sales Milestone
Payments of PII are based, and all other information necessary for the accurate
determination of royalty payments to be made hereunder.

6.02 Audit. On reasonable written notice RBX, at its own expense, shall have the
right, no more than once a calendar year, to have an independent certified
public accountant inspect and

 

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audit the books and records of PII, its Affiliates, any sublicensees and Third
Party Partner, including any Net Sales reports received from its Affiliates, its
sublicensees and its Third Party Partner, during usual business hours for the
sole purpose of, and only to the extent necessary for, determining the
correctness of royalty payments due under this Agreement. Such examination with
respect to any fiscal period shall not take place later than three years
following the expiration of such period, after which royalty payments made for
such fiscal periods shall be final and binding. The expense of any such audit
shall be borne by RBX; provided, however, that, if the audit with respect to a
particular calendar year discloses an error in excess of five percent (5%) in
favor of the PII, then PII shall pay, in addition to the amount of any
underpayment, the cost of the audit. PII shall include substantially the same
audit rights in any sublicense it grants in order to ensure correctness of
payments due hereunder.

6.03 Foreign Payments. All payments due hereunder shall be paid in U.S. dollars,
including, without limitation, royalties on Net Sales outside of the U.S. Dollar
amounts shall be calculated in the foreign currency for the country in which
sales are recorded and will be translated into U.S. dollars based on the average
of the average daily exchange rates for such calendar quarter as published by
the Wall Street Journal for the quarter for which such payments are due.
Payments in U.S. dollars shall be paid by wire transfer to RBX.

ARTICLE VII – INTELLECTUAL PROPERTY

7.01 Ownership of Patents.

Inventorship of inventions conceived or reduced to practice in the course of the
activities under the Development Plan shall be determined by reference to United
States laws pertaining to inventorship. If inventions are conceived or reduced
to practice in the course of activities under the Development Plan by an
individual obliged to assign patent rights to RBX and an individual obliged to
assign patent rights to PII, it shall be jointly owned (“Joint Invention”), and
if one or more claims included in any issued Patent or pending Patent
application which is filed in a patent office in the Territory claim such Joint
Invention, such claims shall be jointly owned (“Joint Patent Rights”). Subject
to Section 3.01, during the term of this Agreement, the Parties shall not use or
grant any rights under, or otherwise commercialize any Joint Patent Rights or
any Joint Invention, and the Parties shall not disclose any Joint Invention to
any third Party (except to the extent each Party would be permitted to disclose
Confidential Information pursuant to Article IX) without obtaining the prior
written consent of the other Party or without mutually agreeing in writing upon
terms and condition, including a royalty or other compensation to the other
Party. After the expiration or termination of this Agreement, the Parties may
use or grant any rights under, or otherwise commercialize, any Joint Patent
Rights or any Joint Invention in the Territory, and the Parties may disclose any
Joint Invention to any Third Party, all without obtaining the prior written
consent of the other Party and without any accounting obligations. If an
invention is solely conceived or reduced to practice in the course of activities
under the Project by an employee, consultant or agent of a Party, it shall be
solely owned by such Party, and any Patent filed claiming such solely owned
invention shall also be solely owned by such Party.

 

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7.02 Ownership of PII Information. PII shall own the entire right, title and
interest in and to any and all PII Information.

7.03 Patent Prosecution.

(a) PII shall have the right and obligation to control the preparation, filing,
prosecution, maintenance and defense of RBX Patents. PII shall control the
preparation, filing, prosecution, maintenance and defense of patent applications
directed to Joint Patent Rights. (“Joint Patents”). In discharging its
obligations under this Section 7.03(a) PII shall exercise diligent efforts, in a
sustained and continuous manner, consistent with the efforts it ordinarily
devotes to the preparation, filing, prosecution, maintenance and defense of its
own patents and intellectual property. RBX shall provide PII any reasonable
assistance required to perfect the RBX Patent Rights and RBX shall provide PII
reasonable assistance required to perfect the Joint Patent Rights. PII shall
provide RBX with drafts of all proposed patent filings (including, without
limitation, patent applications, amendments and responses to official actions)
at least thirty (30) days before filing and shall take into account any comments
provided by RBX to PII, to the extent reasonable, within thirty (30) days (or
such shorter period as shall be required to meet a filing deadline, but in no
event less than fifteen (15) days) after RBX’s receipt of the applicable draft.
If PII decides not to file or maintain any RBX Patent on a country-by-country
basis or patent family basis, PII shall give RBX reasonable notice of same and
after receipt of such notice, RBX may, at its expense, file or maintain such
applications or patents at its own expense. PII shall provide RBX with drafts of
all proposed patent filings relating to the Joint Patents (including, without
limitation, patent applications, amendments and responses to official actions)
at least thirty (30) days before filing and shall take into account any comments
provided by RBX to PII, to the extent reasonable, within thirty (30) days (or
such shorter period as shall be required to meet a filing deadline, but in no
event less than fifteen (15) days) after RBX’s receipt of the applicable draft.
If PII decides not to file or maintain any Joint Patent, on a country-by-country
basis or patent family basis, PII shall give RBX reasonable notice of same and
after receipt of such notice, RBX may at its expense, file or maintain such
applications or patents, and PII shall assign such patents and patent
applications to RBX that RBX elects to file or maintain.

(b) PII shall have the right to control the preparation, filing, prosecution,
maintenance and defense thereof and be responsible for all costs associated with
any patents relating to inventions conceived or reduced to practice in the
course of the activities under the Development Plan solely by PII’s employees or
agents (“PII Patents”). RBX shall provide PII any reasonable assistance required
to perfect the rights defined in Section 7.01. Subject to the last sentence in
this Section 7.03(b), if PII decides not to file or maintain any PII Patents on
a country-by-country basis or patent family basis, PII shall give RBX reasonable
notice of same and after receipt of such notice, RBX may, at its expense, file
or maintain such applications or patents at its own expense, and PII shall
assign such patents and patent applications to RBX that RBX elects to file or
maintain. The previous sentence shall not apply to any decision of PII that is
based on its determination, in its sole discretion, that the value of a
particular PII invention will most likely be maximized by a form of intellectual
property protection other than patent protection, or that a particular filing
would detract from the overall value of the patent estate.

 

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(c) [*] shall be responsible for all patent costs (including filing fees,
maintenance fees, and outside attorney fees) with respect to each Patent within
the RBX Patents and Joint Patents that covers the composition of matter,
manufacture or use of the Compound.

7.04 Notification. PII shall provide a written report to RBX every second
calendar quarter summarizing the status of all RBX Patents and Joint Patents.
Such report shall constitute Confidential Information under Article IX.

7.05 Trademarks. PII shall own all trademarks developed by PII used to identify
a Licensed Product.

ARTICLE VIII – PATENTS AND INFRINGEMENT

8.01 Infringement of Patent Rights. Each party to this Agreement shall notify
the other in writing promptly of any actual, potential or suspected infringement
(collectively “alleged infringement”) of the RBX Patents, Joint Patents or PII
Patents of which such Party becomes aware and shall promptly provide the other
Party with available evidence of such alleged infringement. PII shall have the
first right to take whatever action it deems appropriate to enforce the RBX
Patents, Joint Patents or PII Patents, at its sole cost and expense. If PII does
not, within sixty (60) days of receipt of such notice of alleged infringement
take any action, or file any suit to enforce the RBX Patents, Joint Patents and
PII Patents against such infringing party in a country in the Territory, RBX may
in its discretion, take such action as it deems appropriate, including, without
limitation, filing suit against any such infringing party. If RBX elects to
enforce the RBX Patents, RBX shall use good faith efforts in any such proceeding
against infringers, shall consult with PII during said enforcement and shall
solicit PII’s advice with respect to such enforcement. Regardless of which Party
controls any such enforcement action, RBX and PII shall reasonably cooperate
with each other in the planning and execution of any action to enforce the RBX
Patents, Joint Patents and PII Patents. The Party controlling any such
enforcement action may not settle or consent to an adverse judgment without the
express written consent of the non-controlling Party (such consent not to be
unreasonably withheld or delayed). Any damages or other amounts collected with
respect to such action will first be used to reimburse each of the Parties, on a
pro rata basis, for its out of pocket costs and expenses; and then, any
remaining amount will be distributed [*]% to the Party controlling the
enforcement action and [*]% to the other Party.

8.02 Patent Marking. To the extent permitted by applicable laws and regulations,
PII agrees to mark, and to cause any Affiliate, sublicense or Third Party
Partner to mark, PII’s Licensed Products (through a marking on containers,
packaging or labels, or an Orange Book or like listing) made, sold, or otherwise
disposed of by it or them with any notice of patent rights necessary or
desirable under applicable law to enable patent rights to be enforced to their
full extent in any country where such Licensed Products are to be sold.

8.03 Third Party Infringement Actions. If RBX or any of RBX’s Affiliates or PII
or any of PII’s Affiliates, sublicensees or Third Party Partner shall be sued
by, threatened to be sued by or receives a claim from, a Third Party for
infringement of a Third Party Patent because of the making, using, selling,
offering for sale or importing, or having made, used, sold, offered for sale

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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or imported, the Licensed Products in the Territory, the Party which has been
sued, threatened or received a claim (or its Affiliates, or with respect to PII,
its sublicensees, or Third Party Partner, has been sued) shall promptly notify
the other Party in writing thereof (each, an “Infringement Action”). If RBX
shall receive notice of a certification relating to an abbreviated new drug
application made pursuant to Section 355(j)(2)(A)(viii)(IV) of the FD&C Act, it
shall promptly notify PII in writing (a “Paragraph IV Challenge” and
collectively with an Infringement Action, “Section 8.03 Actions”). PII shall
have the obligation to undertake control of any Section 8.03 Actions in the
Territory which relate to the Compound or a Licensed Product (whether such
action was brought against RBX or PII or any of its respective Affiliates or
sublicensees) and RBX shall cooperate in such defense through counsel of its
choice at RBX’s expense. PII shall take into account RBX’s comments relating to
such Section 8.03 Actions to the extent reasonable. PII may not settle or
consent to an adverse judgment without the expressed prior written consent of
RBX (such consent not to be unreasonably withheld, delayed or conditioned).

ARTICLE IX – CONFIDENTIAL INFORMATION

9.01 Nondisclosure of Confidential Information. All information disclosed by one
Party to the other Party pursuant to this Agreement shall be “Confidential
Information.” The Parties agree that during the Term, and for a period of ten
(10) years thereafter, a Party receiving Confidential Information of the other
Party will (i) maintain in strictest confidence such Confidential Information to
the same extent such Party maintains its own proprietary industrial information
of similar kind and value (but at a minimum each Party shall use commercially
reasonable efforts), (ii) not disclose such Confidential Information to any
Third Party without prior written consent of the other Party, and (iii) not use
such Confidential Information for any purpose except those permitted by this
Agreement. However, such obligation of confidentiality shall not apply to any
Confidential Information that:

(a) Is publicly disclosed by the disclosing Party, either before or after it is
disclosed to the receiving Party hereunder; or

(b) Was known to the receiving Party, without obligation to keep it
confidential, prior to disclosure by the disclosing Party; or

(c) Is subsequently disclosed to the receiving Party by a Third Party lawfully
in possession thereof and without obligation to keep it confidential; or

(d) Has been published by a Third Party; or

(e) Has been independently developed by the receiving Party without the aid,
application or use of all or any part of Confidential Information as evidenced
by the receiving Party’s written records.

9.02 Authorized Disclosure. A Party may disclose the Confidential Information
belonging to the other Party to the extent such disclosure is reasonably
necessary in the following instances:

(a) Filing or prosecuting Patents relating to Compound;

 

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(b) Regulatory Filings and prosecutions of the same;

(c) Prosecuting or defending litigation;

(d) Complying with applicable governmental regulations; and

(e) Disclosure, in connection with the performance of this Agreement, to
sublicensees, a Third Party Partner research collaborators, employees,
consultants, or agents, each of whom prior to disclosure must be bound by
similar obligations of confidentiality and non-use at least equivalent in scope
to those set forth in this Article IX.

The Parties acknowledge that the terms of this Agreement shall be treated as
Confidential Information of both Parties. Such terms may be disclosed by a Party
to potential Third Party Partners, investment bankers, investors, potential
investors, lenders and other financing parties, provided that they are bound by
similar obligations of confidentiality and non-use at least equivalent in scope
to those set forth in this Article IX. In addition, a copy of this Agreement may
be filed by either Party with the Securities and Exchange Commission if such
filing is required by law or regulation. In connection with any such filing,
such Party shall endeavor to obtain confidential treatment of such terms and
other trade secret information to the extent permitted by the Securities and
Exchange Commission.

9.03 Limitations on Publications. The Parties shall not publish any Confidential
Information received from the other Party without the prior written approval of
such Party.

ARTICLE X – WARRANTIES

10.01 Warranties by RBX. RBX represents and warrants to PII as of the Effective
Date and the Option Exercise Date the following:

(a) RBX has the full right and power to grant the Option set forth in
Section 2.01 and the licenses set forth in Section 3.01 in the manner and to the
extent set forth in this Agreement, free and clear of any adverse assignment,
option, grant, right or other encumbrances inconsistent with such grant.

(b) RBX or its Affiliates are the sole owners of the RBX Patents, Compound
Know-How and Manufacturing Know-How.

(c) The chemical formula listed in Section 1.07 accurately defines the compound
that is the subject of RBX Intellectual Property provided by RBX to PII.

(d) No claims, demands, suits, arbitrations or other adversarial proceedings
have been brought or threatened against any Third Party by RBX, which are
related to the RBX Patents or Compound Know-How, or the misappropriation of any
RBX trade secrets relating to the Compound.

(e) RBX has not received any written notice by any Third Party of any pending or
threatened claim, demand, suit, action, mediation, arbitration, order or other
adversarial

 

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proceeding: (i) alleging infringement (or other violation) by RBX of
intellectual property or other rights of any Third Party; or (ii) challenging
RBX’s ownership or use of, or the validity, enforcement, registrability or
maintenance of, any RBX Patent, Manufacturing Know-How or Compound Know-How
owned or licensed by RBX. To RBX’s knowledge, no information contained within
RBX Patents, Manufacturing Know-How or Compound Know-How is being used or
enforced in a manner that would reasonably be expected to result in the
abandonment, cancellation or unenforceability of such RBX Patents, Manufacturing
Know-How or Compound Know-How.

(f) RBX has not entered into any consents, judgments, orders, indemnifications,
forbearances to sue, settlement agreements, licenses or other arrangements that:
(i) restrict the RBX’s right to use any RBX Patent, Manufacturing Know-How or
Compound Know-How; or (ii) restrict the development or commercialization of the
Compound in order to accommodate a Third Party’s intellectual property rights.

(g) Any current and former employee of or consultant to RBX (“Researcher”) who
has contributed to or participated in research and development activities of the
Compound has granted to RBX on an exclusive and unrestricted basis, ownership of
all intellectual property arising out of such Researcher’s research and
development activities involving the Compound. RBX has not granted or assigned
to any Researcher any right to manufacture, have manufactured, assemble, import,
or sell the Compound or Licensed Product.

(h) To RBX’s knowledge, none of its current employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere or conflict with RBX’s obligations
as contemplated under this Agreement. To RBX’s knowledge, RBX has not utilized
any intellectual property or trade secrets owned by any of its employees’ former
employer made prior to their employment by RBX.

(i) Schedule 1.53 is a true, accurate and complete list of all RBX Patents as of
the Effective Date.

(j) Except as described in Schedule 1.53, none of the RBX Patents have been
abandoned. RBX has an existing right to file RBX Patents with the United States
Patent and Trademark Office. Except as described in Schedule 1.53, all
assignment of rights necessary to vest full and complete ownership of RBX
Patents in RBX have been executed by all inventors and correctly recorded in the
World Intellectual Property Organization. RBX is not aware of any inventorship
disputes regarding any RBX Patents.

(k) RBX has made available for PII’s review, all documents and certificates
requested in writing by PII that have been issued to RBX with respect to any RBX
Patent, including all written documentation evidencing ownership and
prosecution.

(l) RBX has disclosed to PII in writing all material information in RBX’s
possession that may limit the scope of patentability of RBX Patents.

 

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(m) RBX has disclosed to PII all material information it has relating to the
Compound, its safety in animals and humans, its development status and its
regulatory status.

(n) RBX has disclosed to PII all material information it has requested in
writing relating to the synthesis of the Compound.

(o) RBX is validly existing and in good standing under the laws of the country
of its organization and has the corporate and other power and authority to enter
into this Agreement. This Agreement has been duly executed and delivered by RBX
and constitutes the valid and binding obligation of RBX enforceable against it
in accordance with its terms except as enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors’ rights generally and by general
equitable principles. The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of RBX, its
officers and directors.

(p) The execution, delivery and performance of this Agreement by RBX (i) are not
in contravention of any provisions of the certification of incorporation or
by-laws of RBX, (ii) will not violate any law or regulation or any order or
decree of any court or any government instrumentality, (iii) will not violate
the terms of any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which RBX is a party or by which RBX or any of its property is
bound, and (iv) do not require any filing or registration with or the consent or
approval of, any governmental body, agency, authority or any other person,
including, without limitation, the U.S. Federal Trade Commission or the U.S.
Department of Justice under the Hart-Scott-Rodino Anti-Trust Improvements Act of
1976, as amended, which has not been made or obtained previously.

10.02 Warranties by PII. PII represents and warrants to RBX the following:

(a) PII is validly existing and in good standing under the laws of the state of
its organization and has the corporate power and authority to enter into this
Agreement. This Agreement has been duly executed and delivered by PII and
constitutes the valid and binding obligation of PII, enforceable against it in
accordance with its terms except as enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors’ rights generally and by general equitable
principles. The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of PII, its officers and
directors.

(b) The execution, delivery and performance of this Agreement by PII (i) are not
in contravention of any provisions of the certification of incorporation or
by-laws of PII, (ii) will not violate any law or regulation or any order or
decree of any court or any government instrumentality, (iii) will not violate
the terms of any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which PII is a party or by which PII or any of its property is
bound, and (iv) do not require any filing or registration with or the consent or
approval of, any governmental body, agency, authority or any other person,
including, without limitation, the U.S. Federal Trade Commission or the U.S.
Department of Justice under the Hart-Scott-Rodino Anti-Trust Improvements Act of
1976, as amended, which has not been made or obtained previously.

 

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(c) There is no (i) action, suit, dispute, proceeding or arbitration (whether by
a governmental agency, division, or otherwise) pending or threatened, or
(ii) investigation (formal or informal) pending or threatened against or
relating to PII or its Affiliates which, in either case, could reasonably
prevent or impair PII from carrying out its obligations under this Agreement.

10.03 Employee Agreements. Each Party represents and warrants that it has
entered into a proprietary information and inventions agreement with each of its
employees prior to the time that any such employee shall receive Confidential
Information from a Disclosing Party or begin work related to this Agreement.
Such agreement shall minimally set forth employee obligations to assign
inventions to the inventing Party and to maintain confidentiality of
Confidential Information consistent with the terms of this Agreement. Each Party
shall enter into a similar agreement with any Third Party retained by the Party
to perform services hereunder prior to the time that such Third Party receives
any Confidential Information from a Disclosing Party or begins work related to
this Agreement.

ARTICLE XI – TERM AND TERMINATION

11.01 Term. Unless otherwise terminated in accordance with the provisions of
this Article XI, the licenses granted herein and the obligations assumed
hereunder shall commence as of the Option Exercise Date and shall expire on a
country-by-country and Licensed Product-by-Licensed Product basis (the Parties
agreeing that each Licensed Product shall have its own term) upon the later to
occur of (i) [*] years from the First Commercial Sale in such country of such
Licensed Product, and (ii) the expiry of the last to expire Enforceable Claim
covering such Licensed Product in such country. In the event PII does not
exercise the Option prior to the expiration of the Option Period, subject to
Section 11.05, this Agreement shall terminate and be of no further legal force
or effect.

11.02 Material Breach. This Agreement may be terminated by either Party upon the
material default of this Agreement by the other Party. In the event of such
material default by a Party (“Defaulting Party”), the other Party
(“Non-Defaulting Party”) shall give the Defaulting Party written notice of the
default and its election to terminate this Agreement at the expiration of a cure
period of twenty (20) days for payment default and thirty (30) days for
non-payment defaults from the date of the notice. If the Defaulting Party fails
to cure the default within the applicable grace period, or if such default is
incapable of being cured within such grace period (expressly excluding payment
defaults) and the Defaulting Party has failed within such period to take actions
that are reasonably likely to cure such default, provided that in no event shall
such default continue beyond one hundred fifty (150) days, then the
Non-Defaulting Party may terminate this Agreement by giving written notice to
the Defaulting Party. The termination will be effective upon Defaulting Party’s
receipt of such termination notice. All termination rights shall be in addition
to and not in substitution for any other remedies that may be available to the
Non-Defaulting Party. Termination pursuant to this section will not relieve the
Defaulting Party from liability and damages to the Non-Defaulting Party for
default. Waiver by either Party of a single default or a succession of defaults
will not deprive such Party of any right to terminate this Agreement arising by
reason of any subsequent default. Notwithstanding the foregoing, PII shall not
be considered in material default under this Agreement if such material default
results from a Licensed Product Manufacturing Failure.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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11.03 Termination for Failure to Meet Key [*] Milestones. RBX may terminate this
Agreement upon thirty (30) days’ written notice to PII in the event that any one
or more of the following milestones have not been achieved within six (6) months
of the date corresponding to such milestone as follows:

 

    

Milestone

  

Date

1.    [*]    [*] 2.    [*]    [*] 3.    [*]    [*] 4.    [*]    [*] 5.    [*]   
[*] 6.    [*]    [*]

provided; however, that the period within which a milestone must be achieved as
provided above, and each subsequent milestone thereafter, will be extended to
the extent of the delay in the completion of the applicable milestone that was
caused by (i) RBX’s delay in compliance with its obligations provided in
Sections 4.05 and 4.07 of this Agreement, (ii) a Force Majeure event or (iii) an
Interfering Event. PII shall use Diligent Efforts to achieve each of the
Milestones provided above as soon as practicable and shall, in the event of a
delay, provide RBX detailed information on a monthly basis describing the reason
for the delay, the actions being taken to overcome the delay and the estimated
time to complete the delayed Milestone.

11.04 Termination for Insolvency/Bankruptcy. It either PII or RBX (i) makes a
general assignment for the benefit or creditors or becomes insolvent; (ii) files
an insolvency petition in bankruptcy; (iii) petitions for or acquiesces in the
appointment of any receiver, trustee or similar officer to liquidate or conserve
its business or a substantial part of its assets; (iv) commences under the laws
of any jurisdiction any proceeding involving its insolvency, bankruptcy,
reorganization, adjustment of debt, dissolution, liquidation or any other
similar proceedings for the release of financially distressed debtors; or
(v) becomes a party to any proceeding or action of the type described in
(iii) or (iv) and such proceeding or action remains undismissed or unstayed for
a period of more than sixty (60) days, then the other party may by written
notice terminate this Agreement in its entirety with immediate effect.

11.05 Voluntary Termination by PII. PII shall have the right to terminate this
Agreement in the course of Development upon giving RBX at least sixty (60) days
prior written notice, if PII, in its sole discretion, determines that further
Development or commercialization of Licensed Product is no longer viable for
safety, efficacy or manufacturing reasons, or, if in the opinion of PII, the
Licensed Product is no longer viable for commercial reasons. In such event, PII
shall, to the extent it is legally required to do so, diligently finalize any
clinical trial it has initiated and issue the corresponding final report and any
other pertinent documents (including providing copies of same to RBX) in
compliance with applicable regulatory requirements. In the event PII exercises
the right of termination provided in this Section 11.05 prior to the completion
of any

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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[*] for the Licensed Product other than (i) for safety, or efficacy reasons
relating to the Licensed Product, (ii) for a material Licensed Product
Manufacturing Failure, or (iii) for breach of this Agreement by RBX, within
thirty (30) days of the provision of PII’s written notice of termination to
Ranbaxy as provided in this Section 11.05, PII shall remit to Ranbaxy a
termination payment of [*].

11.06 Rights of RBX Upon Early Termination. If PII terminates this Agreement
pursuant to Section 11.05 or if Ranbaxy terminates this Agreement under Sections
11.02, 11.03 and/or 11.04, PII shall:

(a) irrevocably lose any and all licenses granted to PII by RBX pursuant to this
Agreement, including, without limitation, pursuant to Section 3.01, which
licenses shall terminate and be of no further force or effect;

(b) be deemed to have automatically granted to RBX (without any further action
required by PII) an irrevocable, fully-paid, worldwide, exclusive license to the
Joint Patent Rights and the Joint Inventions to develop, make, use and sell any
Licensed Product;

(c) be deemed to have automatically granted to RBX (without any further action
required by PII) an irrevocable, worldwide, non-exclusive license under the PII
Patents to develop, make, use and sell any Licensed Product;

(d) promptly, but in no event later than thirty (30) days from the effective
date of termination, provide RBX with copies of all PII Information and PII
shall be deemed to have automatically granted to RBX (without any further action
required by PII) the right to use such information to develop, make, use and
sell (including, without limitation, obtaining Regulatory Approval) any Licensed
Product(s);

(e) PII shall be deemed to have automatically conveyed to RBX (without any
further action required by PPD) all of PII’s, its Affiliates’ and its Third
Party Partner’s right, title and interest in and to any and all Regulatory
Approvals (including related Regulatory Documentation) then pending or otherwise
obtained by PII, its Affiliates or its Third Party Partner relating to the
Compound or any Licensed Product(s);

(f) PII shall execute and deliver and cause its Affiliates and its Third Party
Partner to execute and deliver, such other instruments of conveyance and
transfer and take such other action as RBX may reasonably request to more
effectively convey, transfer to and vest in RBX the information and Regulatory
Approvals described above;

(g) not later than thirty (30) days from the termination of this Agreement,
deliver to RBX (i) all original patent files relating to the RBX Patents,
(ii) copies of the PII Patents (including PII Patent applications) and
(iii) copies of the patent files relating to the Joint Patents, all at PII’s
cost and expense;

(h) destroy and not retain any copies of Confidential Information provided by
RBX pursuant to this Agreement;

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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(i) ensure that any Partnering Agreement will reflect the requirements of this
Section 11.06; and

In the event PII exercises its right of termination under Section 11.05, PII
shall have no further liability or obligation to RBX under the terms of this
Agreement, except as set forth in Sections 11.05, 11.06 and 11.08.

11.07 Early Termination by PII. If PII terminates this Agreement under Sections
11.02, 11.04 or 11.05, any license grant by RBX to PII pursuant to this
Agreement, including, without limitation, as set forth in Section 3.01 shall
automatically terminate and be of no further legal force or effect.

11.08 Residual Obligation upon Termination. Termination of this Agreement for
any reason whatsoever will not release or discharge the Parties from the
performance of any obligation, the payment of any debt or responsibility for any
liability which may have previously accrued and remains to be performed, paid or
discharged, at the date of such termination. However, upon termination no
further obligations under this Agreement shall be incurred by the Parties.
Moreover, termination of this Agreement shall not release either Party of the
obligations of confidentiality set forth in Section 9.01. Sections 5.07, 6.02,
6.03, 7.01, 7.02, 7.05, 8.03 (relating to any Section 8.03 Actions commended
prior to the date of such termination), 11.06, 11.07, 12.01, 12.02, 12.03,
12.07, 12.09, 12.15, 12.16, and 12.17 and Article I shall survive any expiration
or termination of this Agreement.

11.09 Remaining Licensed Product. Upon any termination of this Agreement, PII
shall have the right for twelve (12) months to sell all Licensed Product then on
hand, and to complete all orders for such Licensed Product then on hand, and
royalties shall be paid to RBX with respect to such Licensed Product as though
this Agreement had not terminated.

ARTICLE XII – MISCELLANEOUS

12.01. Indemnification.

(a) RBX Indemnification of PII. RBX shall indemnify, hold harmless and defend
PII, its permitted assignees, and its and their officers, employees, agents,
sublicensees, a Third Party Partner, Affiliates, and/or contractors against any
and all claims, demands, suits, losses, damages, settlements, costs, fees and
expenses of any nature whatsoever, including without limitation reasonable
attorney’s fees, expert witness fees and court costs (“Claim”) resulting from or
arising out of (i) any material breach by RBX of a representation or warranty
contained in this Agreement; (ii) any material breach of this Agreement by RBX;
(iii) any failure by RBX to comply in all material respects with applicable laws
in connection with the performance of its obligations under this Agreement;
(iv) the negligence or willful misconduct of RBX in the performance of this
Agreement; and/or (v) the development, manufacture, packaging, labeling,
handling, storage, transportation, use, distribution, promotion, marketing and
sale of any AB Rated Product by RBX or any of its Affiliates or designated Third
Parties for any AB Rated Product [*]; in each case except to the extent such
Claims result from the gross negligence or willful misconduct of PII in the
performance of this Agreement.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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(b) PII Indemnification of RBX. PII shall indemnify, hold harmless and defend
RBX, its permitted assignees, and its and their officers, employees, agents,
sublicensees, Affiliates and/or contractors against any and all claims, demands,
suits, losses, damages, costs, fees and expenses of any nature whatsoever,
including, without limitation, reasonable attorney’s fees, expert witness fees
and court costs (“Claim”) resulting from or arising out of (i) the Development,
manufacture, packaging, labeling, handling, storage, transportation, use,
distribution, promotion, marketing and sale by PII or its Affiliates, any of
their sublicensees (including sublicensees of such sublicensees), or a Third
Party Partner, distributors or agents of the Compound and any Licensed Products
in the Territory and the recall of any Licensed Products; (ii) any use,
handling, storage, testing, transportation, distribution, manufacturing,
formulation or sale of the RBX [*]; (iii) any alleged or actual infringement or
misappropriation of a Third Party’s intellectual property in connection with the
Development, manufacture and/or commercialization of the Compound or any
Licensed Product including, without limitation, any amounts paid or payable to a
Third Party pursuant to Section 8.03; (iv) the manufacture of the Drug
Substance, CTM Product and/or Licensed Product by PII, its Affiliates, any
sublicensee, Third Party Partner of PII or Third Party; (v) any material breach
by PII of a representation or warranty contained in this Agreement; (vi) any
material breach of this Agreement by PII or its Affiliates, sublicensees or
Third Party Partner of PII; (vii) any injury to or death of any person from the
use of any Drug Substance, CTM Product, or Licensed Product; (viii) any failure
by PII to comply in all material respects with applicable laws in connection
with the performance of its obligations or the exercise or its rights under this
Agreement; and/or (ix) the negligence or willful misconduct of PII or its
Affiliates, sublicensees or Third Party Partner of PII in the performance of
this Agreement; in each case except to the extent such Claims result from the
gross negligence or willful misconduct of RBX in the performance of this
Agreement.

(c) Indemnification Procedure.

(i) If any action is brought against a party entitled to indemnification under
Section 12.01(a) or 12.01(b), as applicable, (each, an “Indemnified Party”),
such Indemnified Party or Parties shall promptly notify the party obligated to
provide indemnification (an “Indemnifying Party”) in writing of the institution
of such action.

(ii) Promptly upon receipt of notice pursuant to subparagraph (a) above, the
Indemnifying Party shall promptly assume the defense of such action, including,
without limitation, the employment of counsel reasonably satisfactory to such
Indemnified Party or Parties, and payment of expenses. An Indemnified Party or
Parties shall have the right to employ its or their own counsel in any such
case, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties, unless: (A) the employment of such counsel shall
have been authorized in writing by the Indemnifying Party in connection with the
defense of such action; or (B) the named parties to such action include both the
Indemnified Party or Parties and the Indemnifying Party and such Indemnified
Party or Parties shall have reasonably concluded that there may be one or more
legal defenses available to it or them or to other Indemnified Parties which are
different from, or in addition to, those available to the Indemnifying Party. In
either of the foregoing events, such fees and expenses shall be borne by

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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the Indemnifying Party and the Indemnifying Party shall not have the right to
direct the defense of such action on behalf of the Indemnified Party or Parties.
Notwithstanding anything to the contrary set forth herein, under no
circumstances shall the Indemnifying Party be obligated to assume responsibility
for the expenses for more than one counsel for all of the Indemnified Parties as
a group.

(iii) Notwithstanding anything contained in this Section 12.01(c) to the
contrary, the Indemnifying Party shall not be liable for any settlement of any
such Claim or action effected without its written consent, which consent shall
not be unreasonably withheld. The Indemnifying Party shall have the right to
settle or compromise any action, or permit a default or consent to the entry of
judgment in, or otherwise seek to terminate, any pending or threatened action,
in respect of which indemnity may be sought hereunder (whether or not any
Indemnified Party is a party thereto), provided such settlement, compromise,
consent, or termination includes a disclaimer of any fault of the Indemnified
Party and an unconditional release of each Indemnified Party from all liability
in respect of such action. In the event such an unconditional release is not
obtainable for each Indemnified Party, then the Indemnifying Party must obtain
the prior written consent of any Indemnified Party not so released before the
Indemnifying Party may enter into such settlement, compromise, consent or
termination, which consent shall not be unreasonably withheld or delayed.

(d) Limitation on Liability. IN NO EVENT SHALL EITHER PARTY OR ITS AFFILIATES,
OR THEIR DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
WHETHER BASED UPON A CLAIM OR ACTION OF CONTRACT, WARRANTY, NEGLIGENCE, STRICT
LIABILITY OR OTHER TORT, OR OTHERWISE ARISING OUT OF THIS AGREEMENT; PROVIDED,
HOWEVER, THAT THIS LIMITATION WILL NOT LIMIT THE INDEMNIFICATION OBLIGATIONS OF
SUCH PARTY UNDER THE PROVISIONS OF THIS ARTICLE XII FOR SUCH DAMAGES CLAIMED BY
A THIRD PARTY (EXPRESSLY EXCLUDING ANY SUBLICENSEE, AFFILIATE OR THIRD PARTY
PARTNER OF PII).

(e) Payment of Indemnification. Upon the final, nonappealable determination of
liability and the amount of the indemnification payment under this Article, the
indemnifying Party will pay such amount to the Indemnified Party in immediately
available funds within thirty (30) days after such determination.

12.02. Product Recalls and Insurance.

(a) Product Recalls. PII shall oversee and handle, at its own cost and expense,
all physical aspects relating to any withdrawal or recall of the Licensed
Products sold by PII or its Affiliates, their respective sublicensees or a Third
Party Partner in the Territory;

(b) Insurance. During the term of this Agreement and for a period of five
(5) years after its expiration or earlier termination, each Party shall obtain,
at its sole cost and expense, product liability insurance, or shall set up, at
its sole cost and expense, a self insurance arrangement, that meets the
following requirements:

(i) the insurance shall insure such Party against all liability related to the
Products (whether that Party’s liability arises from its own conduct or by
virtue of its participation in this Agreement), including liability for bodily
injury, property damage, wrongful death, and any contractual indemnity
obligations imposed by this Agreement; and

 

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(ii) the insurance shall be in amounts, respectively, that are reasonable and
customary in the United States in the pharmaceutical industry, but in no event
shall the product liability insurance maintained by each Party cover less than
[*] per occurrence (or claim) and an annual aggregate of [*]. Each Party shall
provide written proof of the existence of such insurance to the other Party upon
request.

12.03. Arbitration.

(a) Pre-Arbitration Efforts. If a dispute arises between the Parties as to the
interpretation or performance of any of the provisions of this Agreement or as
to matters related to but not covered by this Agreement, then the Parties shall
consult initially to try to resolve the matter amicably. If they shall not be
capable of resolving the matter within thirty (30) days of the dispute arising,
the matter shall be dealt with in accordance with the provisions of
Section 12.03(b).

(b) Arbitration Procedures. All disputes arising out of or in connection with
the Agreement shall be settled by final and binding arbitration by the American
Arbitration Association (“AAA”), under its commercial rules then in effect
except as provided herein. The arbitration will be conducted in New York, NY or
such other geographically neutral site within the United States that is mutually
agreed by the Parties. All proceedings shall be held in English and a
transcribed record prepared in English. The parties shall choose, by mutual
agreement, one arbitrator within twenty (20) days of the filing of an
arbitration demand with the AAA. If the parties are unable to appoint an
arbitrator within the time herein provided or any extension of time that is
mutually agreed on, one arbitrator will be appointed by PII, one arbitrator will
be appointed by RBX, and the third arbitrator will be appointed by the two
arbitrators within thirty (30) days of the date on which the initial period for
appointment of a sole arbitrator by mutual agreement lapsed. The award rendered
by the arbitrator shall include all costs of arbitration, reasonable attorneys’
fees and reasonable costs for expert and other witnesses, and judgment on such
award may be entered in any court having jurisdiction thereof. Nothing in this
Agreement shall be deemed as preventing either party from seeking injunctive
relief (or any other provisional remedy) from any court having jurisdiction over
the Parties and the subject matter of the dispute as necessary to protect either
Party’s name, proprietary information, trade secrets, know-how or any other
proprietary right. If the issues in dispute involve scientific or technical
matters, any arbitrator chosen hereunder shall have educational training and/or
experience sufficient to demonstrate a reasonable level of knowledge in the
field of biotechnology.

12.04. Amendment. This Agreement may not be amended, supplemented or otherwise
modified except by an instrument in writing signed by an authorized
representative of the Parties.

 

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[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

 

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12.05. Entire Agreement. The Parties acknowledge and agree that this Agreement
includes the Schedules and constitutes the entire agreement and understanding
relating to the subject matter of this Agreement. As such, this Agreement
supersedes all previous communications, proposals, representations and
agreements, whether oral or written, including the Confidentiality Agreement,
relating to the subject matter of this Agreement.

12.06. Severability. Each Party agrees that, should any provision of this
Agreement be determined by a court of competent jurisdiction to violate or
contravene any applicable law or policy, such provision will be modified by the
court to the extent necessary to comply with the applicable law or policy, and
such modified provision and the remainder of the provisions hereof will continue
in full force and effect; and if such provision cannot be so modified, it shall
be severed from this Agreement and the remaining provisions shall be equitably
adjusted if necessary, and shall remain in full force and effect.

12.07. Waiver. The waiver of a breach hereunder may be affected only by a
writing signed by the waiving Party and shall not constitute a waiver of any
other breach. Any delay in enforcing a Party’s rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, excepting only as to an express written and signed waiver as to a
particular matter for a particular time period.

12.08. Notices. Any notice required or permitted to be given or delivered
hereunder or by reason of the provisions of this Agreement shall be in writing
and shall be deemed to have been properly served if: (a) delivered personally,
(b) delivered by a recognized overnight courier service instructed to provide
next-day delivery, (c) sent by certified or registered mail, return receipt
requested and first class postage prepaid, or (d) sent by facsimile transmission
followed by confirmation copy delivered by a recognized overnight courier
service the next day. Such notices, demands and other communications shall be
sent to the addresses set forth below, or to such other addresses or to the
attention of such other person as the recipient Party has specified by prior
written notice to the sending Party. Date of service of such notice shall be:
(i) the date such notice is personally delivered or sent by facsimile
transmission (with issuance by the transmitting machine of confirmation of
successful transmission), (ii) three days after the date of mailing if sent by
certified or registered mail, or (iii) one day after date of delivery to the
overnight courier if sent by overnight courier. Unless otherwise specified in
writing, the mailing addresses of the Parties shall be as described below.

 

For:

     Pharmaco Investments, Inc.      3151 South 17th Street      Wilmington, NC
28412      Facsimile: (910) 343-5920     

Attn: Chief Executive Officer

     With a copy to:      Pharmaco Investments, Inc.      3151 South 17th Street
     Wilmington, NC 28412      Facsimile: (910) 343-5920     

Attn: General Counsel

For:

     Ranbaxy Laboratories Ltd.      Plot 90 Sector 32      Gurgaon 1222001
(Haryana) India      Facsimile:     

Attn:

 

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12.09. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, United States, except any
choice of law shall be determined in accordance with the applicable laws of the
countries in which patents encompassed within the scope of this Agreement have
issued. Any action, suit or other legal proceeding which either party may
commence to resolve any matter arising under or relating to any provision of
this Agreement shall be commenced only in the state or federal courts located in
the State of New York, United States, and the parties hereby consent to the
jurisdiction of such court with respect to any such action, suit or proceeding.

12.10. Assignability. This Agreement and the licenses granted herein shall be
binding upon and inure to the benefit of the Parties and their respective
successors in interest, whether by acquisition, merger or purchase of all or
substantially all of the assets of such Party. Except as contemplated in the
foregoing, neither Party shall assign this Agreement or any benefit and/or
burden hereunder without prior written consent of the other Party, provided that
either Party will have the right to assign this Agreement and its benefits and
burdens hereunder to an Affiliate, or to a successor in interest (whether by
acquisition, merger or sale of all or substantially all its assets), without
obtaining the consent of the other party. Nothing in this Section 12.10 shall be
deemed to prevent PII from subcontracting its obligations under this Agreement
to any Third Party, which PII shall have the right to do in its discretion
subject to Section 3.02.

12.11. Release of Information. Unless otherwise mutually agreed by the Parties,
the Parties agree to issue, within two (2) business days from the Option
Exercise Date, a mutually agreed press release relating to the transactions
contemplated by this Agreement. No Party to this Agreement may otherwise release
any information to any Third Party regarding the terms of this Agreement without
the prior written consent of the other Party. Without limitation, this
prohibition applies to press releases, educational and scientific conferences,
promotional Licensed Products, governmental filings, and discussions with public
officials and the media. This provision, however, does not apply to any
publications or disclosures which may be required: (i) by law, including
requests for a copy of this Agreement or related information by tax authorities;
(ii) for recording purposes; and (iii) by investment bankers, lawyers,
accountants and other professional advisors (provided such disclosure is made
under strict confidentiality and the detail of terms disclosed is kept to the
absolute minimum required by such professionals). Each Party agrees that it
shall fully cooperate with the other with respect to all disclosures regarding
this Agreement to the Securities and Exchange Commission and any other
governmental or regulatory agencies, including requests for confidential
treatment of proprietary information of either Party included in any such
disclosures.

 

32

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12.12. Relationship of the Parties. The Parties are independent contractors and
nothing in this Agreement is intended or shall be deemed to constitute or create
a partnership, agency or employer-employee relationship between the Parties.

12.13. Dollars. All references to “dollars” hereunder are to United States
dollars.

12.14. Jointly Prepared. This Agreement has been prepared jointly and shall not
be strictly construed against either Party.

12.15. Headings. The captions or headings of the Sections are inserted only as a
matter of convenience or for reference and shall have no effect on the meaning
of the provisions hereof.

12.16. Counterparts. This Agreement may be executed in one or more counterparts,
including by facsimile, each of which shall be an original, but all of which
taken together shall constitute one and the same agreement.

12.17. Schedules. Each Schedule attached hereto shall be incorporated into and
be a part of this Agreement.

12.18. Force Majeure. Both Parties, and any Third Party vendors or any
sublicensee or Third Party Partner of PII, shall be excused from the performance
of their obligations under this Agreement to the extent that such performance is
prevented, in whole or in part, by Force Majeure events and the nonperforming
Party promptly provides notice of the prevention to the other Party. Such excuse
shall be continued so long as the condition constituting Force Majeure continues
and the nonperforming Party takes reasonable efforts to remove the condition;
provided, however, the obligation to make payment of any payment that is due and
owing hereunder shall not be delayed by the payer because of a Force Majeure
affecting the payer.

12.19. PPD Guarantee. PPD hereby unconditionally and irrevocably guarantees to
RBX the performance of all of the obligations of PII under this Agreement,
including, without limitation, the due and prompt payment by PII of any amounts
payable under Article V.

12.20. No Third Party Beneficiary. No Third Party is or shall be construed to be
a third party beneficiary of any provision of this Agreement.

IN WITNESS WHEREOF, the Parties have executed this Agreement through duly
authorized representatives as of the date first set forth herein.

[The Next Page is the Signature Page]

 

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PHARMACO INVESTMENTS, INC.      RANBAXY LABORATORIES LTD. By:  

 

     By:  

 

Name:  

 

     Name:  

 

Title:  

 

     Title:  

 

PPD, by its signature below, executes and delivers this Agreement to RBX for the
sole and limited purpose of agreeing to be bound by Section 12.19.

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

 

By:  

 

Name:  

 

Title:  

 

 

34

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SCHEDULE 1.13

DEVELOPMENT PLAN

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

SCHEDULE 1.53

RBX PATENTS

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.

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

SCHEDULE 4.05

RBX Know-How

[*]

 

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

[*] Confidential treatment requested; certain information omitted and filed
separately with the SEC.