AGREEMENT

THIS AGREEMENT is made and entered into as of this 4th day of October, 2006, by
and between Interpharm, Inc., having its principal place of business at 75 Adams
Avenue, Hauppauge, New York, 11788 (“Interpharm”), and Tris Pharma, Inc. having
its principal place of business at 2033 Route 130, Suite D, Monmouth Junction,
NJ 08852 (“Tris”).
 
RECITALS
 
A.  Interpharm is engaged in, among other things, the marketing and sale of
finished drug products;
 
B.  Tris is engaged in, among other things, research and product development of
pharmaceutical liquids and manufacturing of pharmaceutical products;
 
C.  Interpharm and Tris desire to establish a relationship pursuant to which
Tris will develop and manufacture, and Interpharm will market and sell, certain
pharmaceutical liquids;
 
D.  Interpharm and Tris previously entered into an agreement for the development
of liquid products dated as of February 24, 2005 (the “Prior Agreement”);
 
E.  As set forth below, this Agreement shall supersede the Prior Agreement,
which shall be of no further force or effect;
 
F.  On February 24, 2005, Interpharm and Tris entered into an agreement whereby
Tris is to transfer certain research and technology to Interpharm which it will
use to develop and manufacture certain solid oral dosage pharmaceutical products
(the “Solids Agreement”);
 
G.  On July 6, 2005, Interpharm and Tris entered into an amendment to the Solids
Agreement (“Amendment No. 1”) to add certain pharmaceutical products to the
Solids Agreement;
 
H.  On April 28, 2006, Interpharm and Tris entered into an amendment (Amendment
No. 2) to the Solids Agreement, as amended by Amendment No. 1; and
 
I.  On October 4, 2006, Interpharm entered into an Amendment No. 3 to the Solids
Agreement, as amended by Amendment No. 1 and Amendment No. 2.
 
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
covenants and obligations set forth herein, Interpharm and Tris hereby agree as
follows:
 
ARTICLE I
 
DEFINITIONS
 
1.1. “ANDA” shall mean the Abbreviated New Drug Application for a Product filed
with the FDA by Interpharm, and any supplements thereto.
 
 
 

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1.2  “API” shall mean the active pharmaceutical ingredient for a Product.
 
1.3  “Commercialization” shall mean the use of Commercially Reasonable efforts
for the commercial marketing and sale of a Product in the Territory, including
advertising, education, planning, marketing, promotion, distribution, market and
product support studies for the Products in the Territory.
 
1.4  “Commercially Reasonable” shall mean a party’s reasonable efforts and
diligence in accordance with its business, legal, medical and scientific
judgment, taking into account the competitiveness of the marketplace, the
proprietary position of a Product, the regulatory structure involved, the
profitability of a Product, and other relevant factors including, without
limitation, technical, legal, scientific or medical factors.
 
1.5  “Confidential Information” shall mean, with respect to a party, all
information of any kind whatsoever (including without limitation, data,
compilations, formulae, models, patent disclosures, procedures, processes,
projections, protocols, results of experimentation and testing, specifications,
strategies and techniques), and all tangible and intangible embodiments thereof
of any kind whatsoever (including without limitation, apparatus, compositions,
documents, drawings, machinery, patent applications, records and reports), which
is disclosed by such party to the other party and is marked, identified as or
otherwise acknowledged to be confidential at the time of disclosure to the other
party, including all Product Details and this Agreement. Notwithstanding the
foregoing, Confidential Information of a party shall not include information
which the other party can establish by written documentation (a) to have been
publicly known prior to disclosure of such information by the disclosing party
to the other party, (b) to have become publicly known, without fault on the part
of the other party, subsequent to disclosure of such information by the
disclosing party to the other party, (c) to have been received by the other
party at any time from a source, other than the disclosing party, rightfully
having possession of and the right to disclose such information, (d) to have
been otherwise known by the other party prior to disclosure of such information
by the disclosing party to the other party, or (e) to have been independently
developed by employees or agents of the other party without the use of such
information disclosed by the disclosing party to the other party.
 
1.6  “Direct Labor and Benefits” shall mean that portion of basic wages, labor
and related payroll taxes and employee benefits spent in actual production of a
Product which can be identified with or charged to a Product.
 
1.7  “FDA” shall mean the United States Food and Drug Administration, and any
successor agency thereto.
 
1.8  “GMP” shall mean current Good Manufacturing Practices promulgated by the
FDA.

 
1.9  “Labeling” shall mean all labels and other written, electronic, printed or
graphic matter upon (i) a Product or any container or wrapper utilized with a
Product, or (ii) any written material accompanying a Product, including, without
limitation, package inserts.
 
 
 
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1.10  “Liquids Pro Rata Share” shall mean, with respect to a Party, such Party’s
portion contributed to the Liquids Set Aside Amount in proportion to the other
Party.
 
1.11  “Liquids Set Aside Amount” shall mean an amount of money equal to: (i) the
Initial Payment, (ii) the Second Payment, (iii) the Third Payment, (iv) the
Fourth Payment and (v) all Research and Development Costs.
 
1.12  “Losses” shall mean any liabilities, damages, costs or expenses, including
reasonable attorney's fees, incurred by either party which arise from any claim,
lawsuit or other action by a third party.
 
1.13 “Manufacturing Costs” shall mean, with respect to a Product, raw material
costs, Product components and the actual cost of manufacturing a Product,
including the cost of Direct Labor and Benefits, and Manufacturing Overhead, all
determined in accordance with U.S. Generally Accepted Accounting Principles.
Upon Interpharm’s prior written approval which shall not be unreasonably
withheld, Manufacturing Costs shall include, to the extent applicable, the cost
to Tris of having some portion of the manufacturing process (e.g., particle size
reduction of API), performed by a third party.
 
1.14  “Manufacturing Overhead” shall include a pro-rata portion of all operating
expenses incurred by and in support of the particular manufacturing cost
centers, purchasing department and quality assurance operations, with respect to
a Product, including indirect labor, related payroll taxes, employee benefits,
depreciation, taxes, insurance, rent, repairs and maintenance, supplies,
utilities, and factory administrative expenses. The pro-rata portion of
operating expenses shall be determined by taking the total output of Products
during the applicable period divided by Tris’ manufacturing capacity and
multiplying the result by the total amount of liquid products manufacturing
overhead for the applicable period. Manufacturing Overhead shall exclude
selling, general and administrative, research and development, and, interest
expenses and all debt service payments of Tris (other than interest expenses and
debt service payments which are related to manufacturing which may be included
in Manufacturing Overhead).
 
1.15  “Net Profits” shall mean the gross invoice sales of Product to third
parties, less the following deductions: 
 
1.15.1  any statutory or contractual liability for rebates to be paid to any
government entity, including but not limited to, rebates to be paid pursuant to
Medicaid rebate legislation and state and local government rebate programs;
 
1.15.2  cash discounts;
 
1.15.3  any adjustments for allowances or credits for returned Product, damaged
Product, commercial rebates, promotional allowances given in lieu of price
adjustments, chargebacks, shelf stock adjustments, trade discounts or any
similar and then customary discounts, credits or adjustments, whether or not
such commercial rebates, or trade discounts are paid directly to the customer;
 
1.15.4   actual freight, shipping and insurance costs incurred by Interpharm;
 
 
 
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1.15.5  actual bad debts;
 
1.15.6  all costs incurred as the result of any recall, field correction, market
withdrawal, stock recovery, or other similar action with respect to any Product
that is not recovered through insurance or other third-party claim;
 
1.15.7  all Manufacturing Costs incurred by Tris; and
 
1.15.8  all costs incurred for Packaging and Labeling.
 
Sales or transfers of Products to affiliates for ultimate use or resale by such
persons shall be at prices (or deemed prices) that are consistent with sales
made to non-affiliates of the same or a similar business type that make
purchases in similar quantities. Similarly, any discounts, adjustments, rebates
and allowances given to customers who are affiliates shall be consistent with
such adjustments or allowances given to customers who are non-affiliates and are
in the same or similar business and make purchases in similar quantities. In
addition, if Interpharm enters into an agreement with a third party pursuant to
which Interpharm agrees not to market a Product and, in consideration of that
agreement, Interpharm receives rights to one or more other products or other
monetary or non-monetary consideration, the revenues received by Interpharm from
the sales of such other products and the fair market value of any other
consideration shall be included in Interpharm’s Net Profits hereunder.
 
1.16  “Packaging” shall mean all primary containers, including blisters,
cartons, shipping cases or any other like matter used in packaging or
accompanying a Product, including electronic files.
 
1.17.    “Products” shall mean the pharmaceutical immediate release liquid
products developed, manufactured and sold pursuant to this Agreement which are
listed on Exhibit A hereto.
 
1.18.    “Product Details” shall mean all properties, specifications and
formulations relating to a Product, including specifications and formulations of
the API, and all properties, specifications, formulations and manufacturing
processes for the finished product necessary for Tris to manufacture and
Interpharm to file a complete and approvable ANDA with the FDA. Product Details
shall also include such advice and counseling regarding information provided by
Tris as may be reasonably required by Interpharm.
 
1.19  “Replacement Products” shall mean the Products that are listed on Exhibit
B by Interpharm from time to time, and as may be amended from time to time.
 
1.20  “Research and Development Costs” shall mean biostudy costs, raw materials
and all other costs incurred in connection with the research and development of
the Products.
 
1.21. “Territory” shall mean the United States of America and its territories
and possessions.
 
 
 
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ARTICLE II

COOPERATION
 
2.1.  Termination of the Prior Agreement.  The Parties hereby agree that upon
execution of this Agreement, the Prior Agreement shall be terminated and of no
further force or effect, with neither Party having any further obligations
thereunder. The Parties further agree to release and discharge each other from
any and all liabilities, claims, actions, causes of action, suits, debts, sums
of money, accounts and demands whatsoever, in law or equity, which either Party
may have against the other, at any time, arising from the Prior Agreement.
 
2.2  Cooperation.  Upon and subject to the terms and conditions of this
Agreement, Interpharm and Tris shall cooperate with respect to researching,
developing, manufacturing and marketing of up to fourteen (14) Products listed
on Exhibit A hereto. Tris hereby agrees that the development of each Product
shall be completed such that Tris shall have taken all steps necessary for
Interpharm to file an ANDA for each Product.
 
2.3  Tris’ Exclusivity Obligation. Tris shall not cooperate with any other
person or entity with respect to the research, development, manufacture, supply
or distribution of a Product in the Territory without the prior written consent
of Interpharm during the term of this Agreement. For the avoidance of doubt,
Tris may not provide Product Details for a Product to, or manufacture any
Product for, any person or entity outside the Territory if such person or entity
intends to, or will sell Products in the Territory. Tris shall take Commercially
Reasonable steps to ensure that other parties do not sell Products in the
Territory, including, but not limited to, requiring such other parties to agree
not to do so and taking Commercially Reasonable actions to enforce such
agreements. In the event that Products or Product Details are sold in the
Territory in contravention of this Agreement, Tris hereby agrees that it shall
pay over to Interpharm the greater of all profits earned with respect to such
Products and Product Details or the amount of Interpharm’s lost profits as
determined by the amount of Products sold in contravention of this Section.
 
2.4 Interpharm’s Exclusivity Obligation.
 
2.4.1  Interpharm hereby covenants not to in-license, market, sell, distribute
or have marketed, have sold or have distributed any Competitive Product in the
Territory during the Term. Notwithstanding the foregoing, if Interpharm or an
Interpharm Affiliate acquires an entity or all or substantially all of the
assets of an entity and such assets include, a Competitive Product, Interpharm
shall use its Commercially Reasonable efforts to divest itself of such
Competitive Product within one-hundred and twenty (120) days of the closing of
such acquisition (subject to any binding commitments to customers), if such
Competitive Product is not being sold commercially at such time. If, however,
any sales of a Competitive Product are made, Tris shall be entitled to payment
by Interpharm of the total Net Profits (determined on the same basis under this
Agreement as in the case of the sale of the Product to which the Competitive
Product relates) from the sales of such Competitive Product. For purposes
hereof, a "Competitive Product" means, with respect to any Product, the generic
AB rated product equivalent to the branded Product listed in Exhibit A.
 
 
 
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2.4.2   Interpharm hereby covenants that it will not, without the prior written
authorization of Tris, utilize the Product Details delivered hereunder to: (i)
promote or actively solicit sale of a Product or advertise a Product, outside of
the Territory; (ii) purchase or cause to be purchased a Product which Interpharm
has represented, directly or indirectly, as being for the purpose of sale in the
Territory for sale in any other country outside the Territory; or (iii)
knowingly sell or distribute for resale a Product purchased hereunder to a third
party who intends to sell outside of the Territory.
 
2.5. The Parties’ Responsibilities.
 
2.5.1  Interpharm’s Responsibilities.  Interpharm shall be responsible for:
 
2.5.1.1  Making the following payments to Tris. In the event that Interpharm
fails to make any of the following payments, Tris’ sole remedy shall be the
commencement of an arbitration in accordance with Section 8.2:
 
2.5.1.1.1   An initial payment of $250,000 to Tris, which has already been paid
by Interpharm and which Tris hereby acknowledges receiving from Interpharm as of
the date hereof (the “Initial Payment”);
 
2.5.1.1.2  $500,000 to Tris upon execution of this Agreement;
 
2.5.1.1.3  [Intentionally left blank.]
 
2.5.1.1.4  $250,000 to Tris by December 15, 2006 (the “Fourth Payment”);
 
2.5.1.1.5  payment for all Research and Development Costs on net 45 terms;
 
2.5.1.1.6  payment for all Packaging and Labeling, on net 45 terms, to the
extent not provided by Interpharm pursuant to Section 2.4.1.7 below;
 
2.5.1.1.7  payment for all raw materials and product components necessary to
manufacture the Products, on net 45 terms, to the extent not otherwise provided
by Interpharm pursuant to Sections 2.5.1.1.6, 2.5.1.2 or 2.5.1.6 hereof;
 
2.5.1.1.8  payment of all Tris Manufacturing Costs on net 45 terms; and
 
2.5.1.1.9  conducting all biostudies for the Products as necessary to obtain FDA
marketing approval in the territory.
 
2.5.1.2  Selecting the API suppliers (including auditing them) and providing to
Tris and paying for the APIs necessary to manufacture the Products, and, to the
extent available, related substances, impurities and technical packages/dossiers
of the Products (the “Product Information”), and testing of samples for
microbial contamination during development. In the event that the Product
Information is not available, Tris may elect not to proceed with the specified
Product under this Agreement by giving notice to Interpharm in writing. Upon
receipt of written notice from Tris, Interpharm shall have the right (i) not to
continue with said Product, thereby reducing the number of Products in Exhibit A
by one (1) or (ii) to select a Replacement Product pursuant to the provisions of
Section 2.5.3, including Section 2.5.3.1. Should Interpharm elect to reduce the
number of Products pursuant to clause (i) of this Section 2.5.1.2, it shall have
the right to recover the “Penalty” (as defined in Section 2.5.3.1 below). Any
such recovery will be applied against future payments owed to Tris, whether
pursuant to Section 2.5.1.1 or Section 3.1, as designated by Interpharm, in its
sole discretion.
 
 
 
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2.5.1.3  Supplying to Tris samples of the branded, and if generic versions of
the branded Product are sold commercially, samples of the generic versions of
the Products which Tris is requested to develop.   
                2.5.1.4  obtaining approval of, and maintenance of, any ANDAs
for a Product and if required by FDA. If any other federal or foreign government
or regulatory submissions or agreements are required to manufacture a Product in
accordance with the ANDAs, Interpharm shall be responsible for completing such
submissions and for payment of associated fees;
 
2.5.1.5  Commercialization of the Products and payment of all related costs
(“Marketing Costs”);
 
2.5.1.6  performing an analysis of all Products to determine whether a Product
will infringe on the intellectual property of another party (an “IP Analysis”).
Interpharm shall perform an IP Analysis within sixty (60) days of receipt from
Tris of the Product Details for a Product. In the event that Interpharm believes
within the sixty (60) day period that a Product, as formulated in the Product
Details, infringes the intellectual property of another party, it shall provide
written notice to Tris. Tris shall thereupon advise Interpharm as to whether it
agrees with Interpharm’s position. If (i) Tris does agree with Interpharm, or
(ii) if it does not, but Interpharm, acting in good faith, remains convinced,
after hearing Tris’ arguments, that the Product infringes, the parties shall
meet in good faith to decide on a course of action. In the event that the
parties are unable to agree on a reformulation plan for the Product so as not to
infringe on the intellectual property of another party, Interpharm shall select
a Replacement Product with the consent of Tris, such consent not to be
unreasonably withheld. In the event that Interpharm selects a Replacement
Product, all rights to the original Product shall revert exclusively to Tris;
and
 
2.5.1.7  providing Tris, beginning 180 days after the filing date of each
Product ANDA, twelve month sales forecasts for such Product (the “Forecasts”).
Interpharm shall have the right, at any time, to amend the Forecasts in good
faith based upon changes in market conditions for a Product. The Parties agree
to negotiate and finalize a comprehensive manufacturing and supply agreement for
the Products within six months from the effective date of this Agreement.
 
 
 
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2.5.2  Tris’s Responsibilities.  Tris shall be responsible for:
 
2.5.2.1  providing Product Details for the Products, as well as conduct
stability testing and take all steps necessary for Interpharm to file for an
ANDA for each Product.
 
2.5.2.2  the manufacturing and supply of each Product in the event that an ANDA
for a Product is necessary and is obtained. Specifically, Tris shall
manufacture, fill, package, label and warehouse each Product in conformity with
GMP, the ANDA and all applicable laws and regulations;
 
2.5.2.3  providing any and all Product Details to Interpharm in the form that
may be necessary or required to manufacture a Product, market a Product, obtain
an ANDA for a Product, if an ANDA is necessary, for any step necessary in
obtaining an ANDA and as may be reasonably requested by Interpharm; 
 
2.5.2.4  conducting any studies (other than the biostudies) required to support
an ANDA for a Product or to reply to a deficiency letter from the FDA with
respect to a Product, including, but not limited to, stability and microbial
testing; and
 
2.5.2.5  obtaining all equipment necessary to manufacture the Products, and
having such equipment validated, prior to completion of development of the first
Product listed on Exhibit A.
 
2.5.2.6 within 5 business days after each shipment of Product, provide
Interpharm with a statement of its standard manufacturing costs for the Product
(“SMC Statement”). “SMC Statement” shall mean Tris’ good faith estimate of the
Manufacturing Costs for a specific shipment of Product.
 
2.5.2.7 within 45 days after the end of each calendar quarter, provide
Interpharm with a true and accurate statement of its manufacturing costs for the
Product (“TMC Statement”). “TMC Statement” shall mean Tris’ actual Manufacturing
Costs for a specific shipment of Product.
 
2.5.3  Replacement Products.   With the written consent of Tris, such consent
not to be unreasonably withheld, Interpharm may substitute one of the
Replacement Products for any Products listed on Exhibit A at any time prior to
Tris commencing formulation for a Product listed on Exhibit A; provided, that
Interpharm shall only have a right of substitution in the event that one of the
following occurs: (1) Tris confirms that it is unable to deliver a formulation
for such Product; (2) the commencement of such formulation is delayed; or (3)
Interpharm has the right to select a Replacement Product pursuant to Section
2.5.1.7 above.
 
2.5.3.1 In the event that Interpharm has the right to request a Replacement
Product for a Product pursuant to Section 2.5.3 above and Tris withholds consent
for more than two (2) Replacement Products for such Product, Interpharm shall
have the right not to continue with said Product, thereby reducing the number of
Products referred to in Section 2.1 by one (1). In the event that Interpharm
exercises its rights under this Section 2.5.3, it shall have the right to
recover any amounts paid to Tris under Section 2.4.1.1.4 above, and a pro rata
portion of any payment made to Tris under Section 2.4.1.1.1, 2.4.1.1.2 or
Section 2.4.1.1.3 above (the “Penalty”). Any such recovery will be applied
against future payments owed to Tris, whether pursuant to Section 2.4.1.1 or
Section 3.1, as designated by Interpharm, in its sole discretion.
 
 
 
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2.6  Tris License.  Tris shall not, at any time during the term of this
Agreement, manufacture or sell any Product under License unless, on a
product-by-product basis, Interpharm (i) fails to commercially launch a Product
within 12 months of FDA approval and such decision to delay the launch of the
Product is not the result of (a) an outstanding infringement claim involving the
Product or (b) Tris’ inability to manufacture the Product; or (ii) fifteen
months after FDA approval of a Product, Interpharm’s market share of that
Product is less than 35% of the market share forecast in the initial Forecast
under term 2.5.1.7. In the event that Tris wishes to manufacture and/or sell any
Product pursuant to this Section 2.6(i) or (ii), it shall first provide
Interpharm with at least 90 days prior written notice (a “Tris Manufacturing
Notice”). For the sake of clarity, the Tris Manufacturing Notice may not be
submitted to Interpharm earlier than 90 days prior to the 12 month or 15 month
time point respectively provided in terms 2.6(i) and (ii). “License” shall mean
Tris’ limited right to manufacture and/or sell Product under Interpharm’s ANDA
which right shall only be triggered under the conditions set forth in this
Section 2.6.
 
ARTICLE III
 
PROFIT SHARING, EXPENSE RECOVERY, SET ASIDE AND BREACH
 
      3.1. Profit Sharing.  
 
        3 .1.1  Sales by Interpharm. Upon the commencement of Interpharm’s sale
of each Product, under this Agreement, 10% of Net Profits shall be set aside to
be distributed to the Parties (the “Liquids Set Aside”), to satisfy each Party’s
Liquids Pro Rata Share of the Liquids Set Aside Amount, pursuant to Section
3.1.3.1 of the Solids Agreement, as amended. Tris shall be entitled to receive
40% of the remaining Net Profits after the Liquids Set Aside (the “Tris
Payment”). Within twenty (20) business days of the end of each month, Interpharm
shall provide to Tris a calculation of the Tris Payment based on monies actually
collected and received by it (the “Tris Net Profit Statement”) along with
payment in the amount of the Tris Payment. In order for Interpharm to calculate
the Tris Payment, Tris must provide to Interpharm, no more than five (5)
business days after each shipment of Product to Interpharm, its SMC Statement
for the shipment of Product. In the event that Interpharm fails to deliver a
Tris Net Profit Statement for any month, which is not the result of Tris’
failure to provide its SMC Statement, Tris shall provide a written notice of
such non-delivery to Interpharm after which it shall have an additional five (5)
business day to provide the Tris Net Profit Statement. During each following
calendar quarter, Interpharm and Tris shall reconcile the SMC Statements against
the TMC Statements for the preceding quarter and shall accordingly adjust the
Net Profits due to each Party within 90 days from the end of the preceding
quarter. With respect to any breaches or disputes that arise pursuant to this
Section, Tris’ sole remedy shall be the commencement of arbitration pursuant to
Section 8.2.
 
        3.1.2  Sales by Tris.  In the event that Tris begins sales of a Product
pursuant to a Tris Manufacturing Notice, Interpharm shall be entitled to receive
its share of the Liquids Set Aside, plus 40% of the remaining Net Profits after
the Liquids Set Aside (the “Interpharm Payment”). Within twenty (20) business
days of the end of each month, Tris shall provide to Interpharm a calculation of
the Interpharm Payment based on monies actually collected and received by it
(the “Interpharm Net Profit Statement”) along with payment in the amount of the
Interpharm Payment. In the event that Tris fails to deliver an Interpharm Net
Profit Statement for any month, Interpharm shall provide a written notice of
such non-delivery to Tris after which it shall have an additional five (5)
business day to provide the Interpharm Net Profit Statement.
 
 
 
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ARTICLE IV
 
FURTHER OBLIGATIONS OF THE PARTIES
 
4.1.  Regulatory File Maintenance. Interpharm shall be solely responsible for
maintaining the ANDA and all other applicable FDA approvals and registrations to
permit the sale of Product.
 
4.2.  Facility Qualification. Tris shall take all Commercially Reasonable
actions to qualify (and thereafter to maintain qualification of) the facility
(or facilities) at which Tris will manufacture Products hereunder, as required
under applicable law.
 
4.3.   Adverse Reactions; Recall. In the event Interpharm believes it may be
necessary to conduct a recall, field correction, market withdrawal, stock
recovery, or other similar action with respect to a Product (a “Recall”),
Interpharm shall have sole discretion to make all decisions with respect to such
events. To the extent the Recall arises solely from Interpharm acts or omissions
in the, marketing, distribution, storage or handling of such Product, the cost
of goods sold, distribution expenses and third-party recall expenses
(collectively, "Recall Costs") shall be borne by Interpharm. To the extent the
recall arises solely from the manufacture of Product or Tris’ breach of this
Agreement, the Recall Costs shall be borne by Tris. In the event the Recall is
not the fault of either party the Recall Costs shall be borne by the parties
equally.

 
4.4  Audit Rights.
 
4.4.1  Tris Audit Rights. Tris shall have the right at any time and from time to
time to nominate a firm of independent certified public accountants to have
access to the financial records of Interpharm relating to Products to verify, at
Tris’ expense, Net Profits. In the event that the auditing accountant finds that
Interpharm’s calculation of Net Profits, varies from the actual amounts by more
than five percent (5%), Tris shall provide Interpharm with notice of the
variance. Interpharm shall have thirty (30) days from the receipt of such notice
to analyze the variance. At the conclusion of the thirty (30) day period,
Interpharm shall either (i) pay the cost of that audit and any monies owed as a
result of the variance with interest at five percent (5%) per annum on such
amount for the period of time that the variance existed or (ii) provide Tris
written notice of any disagreement with Tris’ position (the “Interpharm
Notice”). In the event that Tris disagrees with the Interpharm Notice, then
Tris’s sole remedy shall be commencement of an arbitration in accordance with
Section 8.2. 
 
4.4.2  Interpharm Audit Rights.  Interpharm shall have the right at any time and
from time to time to nominate a firm of independent certified public accountants
to have access to the financial records of Tris relating to Products to verify,
at Interpharm’s expense, Manufacturing Costs. In the event that the auditing
accountant finds that Tris’ calculation of Manufacturing Costs, varies from the
actual amounts by more than five percent (5%), Interpharm shall provide Tris
with notice of the variance. Tris shall have thirty (30) days from the receipt
of such notice to analyze the variance. At the conclusion of the thirty (30) day
period, Tris shall either (i) pay the cost of that audit and any monies owed as
a result of the variance with interest at five percent (5%) per annum on such
amount for the period of time that the variance existed or (ii) provide
Interpharm written notice of any disagreement with Interpharm’s position (the
“Tris Notice”). In the event that Interpharm disagrees with the Tris Notice,
then Interpharm’s sole remedy shall be commencement of an arbitration in
accordance with Section 8.2. 
 
 
 
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ARTICLE V
 
REPRESENTATIONS, WARRANTIES AND COVENANTS
 
5.1. Representations and Warranties by each Party. Each Party hereby represents
and warrants to the other party as follows:
 
5.1.1 Corporate Existence. Such Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated.
 
5.1.2  Authorization and Enforcement of Obligations. Such party (a) has the
corporate power and authority and the legal right to enter into this Agreement
and to perform its obligations hereunder, and (b) has taken all necessary
corporate action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder. This Agreement has
been duly executed and delivered on behalf of such party, and constitutes a
legal, valid, binding obligation, enforceable against such party in accordance
with its terms.
 
5.1.3  No Conflict. The execution and delivery of this Agreement and the
performance of such party’s obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations, and (b) do not
conflict with, or constitute a default under, any material contractual
obligation of such party.
 
    5.2  Additional Representations, Warranties and Covenants by Tris.  Tris
hereby represents, warrants and agrees with Interpharm that all Product Details
provided to, and to be provided to Interpharm, are and will be true and accurate
in all respects and will include use of only pharmaceutically accepted products
listed in the IIG Guide or GRAS (Generally Recognized as Safe) products.
 
ARTICLE VI 
 
OTHER AGREEMENTS
 
6.1.  Ownership of Intellectual Property Rights other than ANDAs. Tris hereby
grants to Interpharm a royalty free and fully paid up license to use all
technology, discoveries, patent applications, patents, know-how and inventions
relating to a Product or any Product Details for a Product in the Territory (the
“Interpharm License”). Interpharm may use or exploit the Interpharm License for
any purpose whatsoever in the Territory.
 
 
 
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6.2  Ownership of ANDAs.  Tris hereby agrees that Interpharm shall have all
ownership rights with respect to all Product ANDAs.
 
ARTICLE VII
 
CONFIDENTIALITY AND PUBLIC DISCLOSURE
 
7.1.  Confidentiality. Except for literature and information intended for
disclosure to customers, and except as may be required to obtain government
approval to manufacture, sell or use a Product, or as may be required under
applicable federal securities laws, each Party will treat as confidential the
Confidential Information, and will take all necessary precautions to assure the
confidentiality of such information. Each party agrees to return to the other
party upon the expiration or termination of this Agreement all Confidential
Information acquired from such other party, except as to such information it may
be required to retain under applicable law or regulation, and except for one
copy of such information to be retained by such party’s legal department or
outside counsel. Neither Party shall, during the period of this Agreement or for
five (5) years thereafter, without the other party’s express prior written
consent use or disclose any such Confidential Information for any purpose other
than to carry out its obligations hereunder. Each Party, prior to disclosure of
such Confidential Information to any employee, consultant or advisor shall
ensure that such person is bound in writing to observe the confidentiality
provisions of this Agreement. The obligations of confidentiality shall not apply
to information that the receiving party is required by law or regulation to
disclose, provided however that the receiving party shall so notify the
disclosing party of its intent and cooperate with the disclosing party on
reasonable measures to protect the confidentiality of the information.
 
7.2.  Public Disclosure. Except for such disclosure as is deemed necessary, in
the reasonable judgment of a Party, to comply with applicable laws, no
announcement, news release, public statement, publication, or presentation
relating to the existence of this Agreement, the subject matter hereof, or
either Party’s performance hereunder will be made without the other Party’s
prior written approval, which approval shall not be unreasonably withheld. The
Parties agree that they will use reasonable efforts to coordinate the initial
announcement or press release relating to the existence of this Agreement so
that such initial announcement or press release by each is made
contemporaneously.
 
ARTICLE VIII 
 
TERM; ARBITRATION OF CERTAIN DISPUTES
 
8.1  Term. Unless sooner terminated as provided in this Agreement, in the event
that Interpharm obtains an ANDA for any Products, the term of this Agreement
shall be for the same term that the last remaining ANDA for a Product that is
valid and in effect. 
 
8.2  Arbitration Procedure.  The Parties hereby agree that only Sections
2.4.1.1, 3.1 and 4.4 of this Agreement shall be subject to arbitration. Any
arbitration shall be conducted in accordance with the following provisions:
 
 
 
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8.2.1  Any Party seeking to commence an arbitration hereunder shall send a
written notice providing the facts underlying the potential arbitration to the
other Party. The Parties shall then make a good faith effort to settle the
dispute. In the event that the dispute is not settled within thirty (30) days of
delivery of the notice, the Party that delivered the notice may commence an
arbitration hereunder;

8.2.2  Arbitrations shall be conducted in accordance with the Commercial Rules
of the American Arbitration Association (“AAA”) by three arbitrators at a AAA
facility in New York City;

8.2.3  The costs of the arbitration and of the Parties in conducted the
arbitration, including reasonable attorneys’ fees, shall be borne by the losing
Party;

8.2.4  Upon and after the submission of any dispute to arbitration, the Parties
shall continue to exercise their remaining respective rights, and fulfill their
remaining respective obligations under this Agreement;

8.2.5  Any arbitration award rendered in accordance with the provisions of this
Section 8.2 shall be final and binding upon the concerned Parties, and the
Parties further agree that such award may be enforced by any court having
jurisdiction over the Party against which the award has been rendered or the
assets of such Party wherever the same may be located. The arbitrators shall be
instructed that any such arbitration shall be completed and an arbitration award
issued within three (3) months following the commencement thereof.

8.2.6  Liquidated Damages.  In the event that Interpharm fails to pay a final
arbitration award in favor of Tris within thirty (30) days of the rendering of
the final award, Interpharm shall pay to Tris liquidated damages of $20,000 in
addition to the award. The Parties acknowledge and agree that the sums payable
hereunder are liquidated damages and not penalties. The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred by Tris
is incapable or is difficult to precisely estimate, (ii) the amounts specified
bear a reasonable proportion and are not plainly or grossly disproportionate to
the probable loss likely to be incurred by Tris in the event that a final
arbitration award is not paid promptly, and (iii) the Parties are sophisticated
business parties and have been represented by sophisticated and able legal
counsel and negotiated this Agreement at arm’s length.
 
    8.3 Termination by Either Party for Cause.   This Agreement may be
terminated prior to the expiration of the Term by either Party if the other
Party is subject to a Chapter 7 or other liquidation bankruptcy, dissolution or
winding-up of operations (other than dissolution or winding up for the purposes
or reconstruction or amalgamation)
 
       8.4  Effect of Termination. 
 
8.4.1  Upon termination of the Agreement by Tris with respect to a particular
Product, the following shall occur:
 
 
 
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8.4.1.1  All rights and licenses granted to Interpharm for such particular
Product shall terminate immediately;
 
8.4.1.2  Interpharm shall have no further rights hereunder in the particular
Product, and the ANDA for such Product shall revert and be transferred to Tris,
subject to Interpharm's option to sell off existing inventory of such particular
Product for two (2) years after the termination date;
 
8.4.2  Upon termination of the Agreement by Interpharm, the following shall
occur:
 
8.4.2.1  All future payment obligations to Tris shall terminate immediately,
other than the obligation to pay any amounts that were due and owing prior to
the date of termination;
 
8.4.2.2  Interpharm shall have the unrestricted right to manufacture and sell
the Products in or outside of the Territory on a royalty-free basis.
 
8.4.3 Expiration or termination of this Agreement shall not relieve the Parties
of any obligation, including any payment obligation, accruing prior to such
expiration or termination. .
 
8.4.4 Within thirty (30) days following the expiration or termination of this
Agreement, the non-terminating Party shall return to the other Party, or
destroy, upon the written request of the other Party, any and all Confidential
Information of the other Party in its possession and upon a Party's request,
such destruction (or delivery) shall be confirmed in writing to such Party by a
responsible officer of the other Party.

 
ARTICLE IX 
 
INDEMNIFICATION
 

9.1  
Indemnification.

 
9.1.1  Tris Indemnification. Tris agrees to indemnify, defend and hold
Interpharm harmless from and against any Losses resulting from or arising out of
the execution by Tris of this Agreement, the performance or breach by Tris of
its representations, warranties, covenants or obligations under this Agreement,
failure by Tris to take any action required to be taken by it (and not by
Interpharm) hereunder, at law or otherwise, its manufacturing, storage,
handling, packaging or labeling of a Product., or its negligence or willful
misconduct in the performance of its obligations hereunder. In the event that
Tris markets or sells any Product pursuant to Section 2.6, Tris shall further
indemnify, defend and hold Interpharm harmless from and against any Losses
resulting from or arising out of Tris’ sale, marketing or commercialization of
any Product.
 
9.1.2  Interpharm Indemnification. Interpharm agrees to indemnify, defend and
hold Tris harmless from and against any Losses resulting from or arising out of
(i) Interpharm’s breach of its representations, warranties, covenants or
obligations under this Agreement, (ii) any act of Interpharm or failure by
Interpharm to take any action required to be taken by it (and not by Tris)
hereunder, at law or otherwise, (iii) infringement on the intellectual property
of a third party, or, subject to Tris’s performance of Section 5.2, (iv) any
injuries caused by (a) the marketing or distribution of a Product, or (b) the
failure to warn of the risks associated with a Product.
 
 
 
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9.1.3  Indemnification Procedure. A Party seeking indemnification (“Indemnified
Party”) shall notify, in writing, the other party (“Indemnifying Party”) within
fifteen (15) days from the assertion of any claim or discovery of any fact upon
which the Indemnified Party intends to base a claim for indemnification. An
Indemnified Party's failure to so notify the Indemnifying Party shall not,
however, relieve such Indemnifying Party from any liability under this Agreement
to the Indemnified Party with respect to such claim except to the extent that
such Indemnifying Party is actually denied, during the period of delay in
notice, the opportunity to remedy or otherwise mitigate the event or
activity(ies) giving rise to the claim for indemnification and thereby suffers
or otherwise incurs additional liquidated or other readily quantifiable damages
as a result of such failure. The Indemnifying Party, while reserving the right
to contest its obligations to indemnify hereunder, shall be responsible for the
defense of any claim, demand, lawsuit or other proceeding in connection with
which the Indemnified Party claims indemnification hereunder. The Indemnified
Party shall have the right at its own expense to participate jointly with the
Indemnifying Party in the defense of any such claim, demand, lawsuit or other
proceeding, but with respect to any issue involved in such claim, demand,
lawsuit or other proceeding with respect to which the Indemnifying Party has
acknowledged its obligation to indemnify the Indemnified party hereunder, the
Indemnifying Party shall have the right to select counsel, settle, try or
otherwise dispose of or handle such claim, demand, lawsuit or other proceeding
on such terms as the Indemnifying Party shall deem appropriate, subject to any
reasonable objection of the Indemnified Party.
 
          9.1.4 Settlements. The Indemnifying Party shall not have the right to
settle or compromise any claim against the Indemnified Party.
 
ARTICLE X
 
MISCELLANEOUS
 
10.1. Independent Contractor. It is understood that each Party is acting as an
independent contractor for its own account and this Agreement does not establish
a joint venture, agency, partnership or employer/employee relationship between
the Parties. Neither Party shall have authority to conclude contracts or
otherwise to act for or bind the other Party in any manner.
 
10.2. Notices. All notices or other communications given pursuant hereto by one
party hereto to the other party shall be in writing and deemed given (a) when
delivered by messenger, (b) when sent by telecopier, (with receipt confirmed),
(c) when received by the addressee, if sent by Express Mail, Federal Express or
other express delivery service (receipt requested), or (d) five days after being
mailed in the U.S., first-class postage prepaid, registered or certified, in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate as
to itself by notice to the other party):
 
 
 
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If to Tris, to it at:
 
Tris Pharma, Inc. 
2033 Route 130, Suite D, Monmouth Junction, NJ 08852
 
Attention: Ketan Mehta
 
Phone: 732-940-2800; Fax: 732-940-2855
 
If to Interpharm, to it at:
 
Interpharm, Inc.
75 Adams Avenue
Hauppauge, New York, 11788
Attention: Kenneth Cappel. Esq.
Facsimile: (631) 952-9587  

with a copy to:

Guzov Ofsink, LLC
600 Madison Avenue, 14th Floor
New York, New York 10022
Facsimile:  (212) 688-7273
 
10.3. Assignment. Neither Party shall, without the prior written consent of the
other Party having been obtained, assign or transfer this Agreement to any
person or entity, in whole or in part, provided that, each Party may assign or
transfer this Agreement to any affiliate or to any successor by merger of such
Party, or upon a sale of all or substantially all of such Parties assets,
provided that such assigning Party shall remain liable for its obligations
hereunder. All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the Parties hereto and
their respective successors and assigns.
 
10.4.  Severability. If any portion of this Agreement is held invalid by a court
of competent jurisdiction, such portion shall be deemed to be of no force and
effect and the Agreement shall be construed as if such portion had not been
included herein, provided however, if the deletion of such provision materially
impairs the commercial value of this Agreement to either party, the Parties
shall attempt to renegotiate such provision in good faith.
 
10.5.  Entire Agreement. This Agreement attached hereto contain the sole and
entire agreement and understanding of the parties hereto and their respective
affiliates and representatives related to the subject matter hereof and
supersede all oral or written agreements concerning the subject matter made
prior to the date of this Agreement.
 
 
 
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10.6.  Amendment; Waiver. This Agreement cannot be amended, changed, modified or
supplemented orally, and no amendment, change, modification or supplement of
this Agreement shall be recognized nor have any effect, unless the writing in
which it is set forth is signed by Interpharm and Tris, nor shall any waiver of
any of the provisions of this Agreement be effective unless in writing and
signed by the party to be charged therewith. The failure of either Party to
enforce, at any time, or for any period of time, any provision hereof or the
failure of either Party to exercise any option herein shall not be construed as
a waiver of such provision or option and shall in no way affect that party’s
right to enforce such provision or exercise such option. No waiver of any
provision hereof shall be deemed to be, or shall constitute, a waiver of any
other provision, or with respect to any succeeding breach of the same provision.
 
10.7. Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, as though made and to be
fully performed therein without regard to conflicts of laws principles thereof.
 
10.8. Force Majeure.
 
10.8.1  The obligations of the either Party hereunder shall be suspended during
the time and to the extent that such Party is prevented from complying therewith
due to any event or circumstances beyond the control and without the fault or
negligence of that Party so affected (which circumstance is hereinafter referred
to as “Force Majeure”) including but not limited to accidents, perils of
navigation, floods, fire, storms, earthquakes, lockouts, explosion, hostilities,
war (whether declared or undeclared), civil disturbances, order or acts of any
government, whether de jure or de facto or any official purporting to act under
authority of any such government, illegality arising from domestic or foreign
laws or regulations, insurrections, quarantine or custom restrictions, strikes,
lockouts, or other labor difficulty at the parties, or acts of God or other
similar events beyond the reasonable control of Interpharm or Tris resulting in
hindrance of the performance by either Party of its respective obligations
hereunder.
 
10.8.2  As soon as possible after being affected by a Force Majeure
circumstance, the Party so affected shall furnish to the other party all
particulars of the Force Majeure and the manner in which its performance is
thereby prevented or delayed. The Party whose obligations hereunder have been
suspended shall promptly and diligently pursue appropriate action to enable it
to lift the Force Majeure situation, except that party shall not be obligated to
settle any strike, lockout or other labor difficulty on terms contrary to its
wishes. In the event that a Force Majeure circumstance is not resolved within
ninety (90) days the other Party may immediately terminate this Agreement.
 
10.9.   Singular and Plural Forms. The use herein of the singular form shall
also denote the plural form, and the use herein of the plural form shall denote
the singular form, as in each case the context may require.
 
10.10   Headings. The headings contained in this Agreement are for convenience
of reference only and shall not constitute a part hereof or define, limit or
otherwise affect the meaning of any of the terms or provisions hereof.
 
 
 
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10.11   Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
 
10.12  Arbitration.  Only disputes arising under Sections 2.3.1.1, 3.1 and 4.4
of this Agreement shall be arbitrable. The Parties hereby agree that any other
dispute arising under this Agreement shall not be submitted for arbitration and
shall not be arbitrable.
 
 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective duly authorized officers as of the date first above written.
 

        INTERPHARM, INC.  
   
   
  By:      

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

  Raj Sutaria, COO 

 

        TRIS PHARMA, INC.  
   
   
    By:      

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

  Ketan Mehta, CEO and President 

 
 
 
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